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ECB to revise its forecasts – Merrill Lynch and Bank of America

FXstreet.com (London) - Research teams at Merrill Lynch and Bank of America have said economic activity indicators have stabilised, in line with their ECB GDP forecasts.

Since the release of April PMIs that surprised clearly to the downside, data has consistently been in line with, or slightly above, consensus, but in line with their Q2 projections. The downward inflation surprise was largely a one-off, in their view, and does suggest minor revision to ECB’s inflation projections.

They pointed out before that they were concerned about the deceleration of inflation, although the breakdown suggests that most of the weakness stems from volatile food and energy inflation, while core inflation is sluggish Hence, they believe the ECB will only marginally revise its forecasts, especially in 2013; though they could revise GDP for 2014 on the back of weaker investment

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