German investor morale up in December on ECB expectations: ZEW
GERMAN investor morale improved in December, the ZEW economic research institute said on Tuesday (Dec 12), as expectations grew for an interest rate cut by the European Central Bank in the medium term.
The institute reported a rise in its economic sentiment index to 12.8 points in December from 9.8 points in November, beating expectations of analysts polled by Reuters for a slight dip to 8.8 points.
December marks the fifth straight month that the expectations index rose, suggesting respondents expect the economic situation in Germany to improve over the coming six months.
The assessment measuring the current situation in Germany also rose slightly in December, to -77.1 from -79.8 the month before.
“Despite the current budget crisis, the assessment of the situation and economic expectations for Germany have once again slightly improved,” ZEW president Achim Wambach said.
“This is due to the fact that the share of respondents expecting interest rate cuts by the ECB in the medium term has doubled,” Wambach added.
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The construction industry was significantly more optimistic this month with its expectations, said Wambach.
ECB board member Isabel Schnabel, widely seen as a hawk, had told Reuters last week that the bank can take further hikes off the table and policymakers should not guide for steady rates through mid-2024.
Analysts said the ZEW results added to signs that the German economy was slightly improving, albeit at a low level.
“Regardless of the continuing upward trend, however, the emerging buoyant forces are still very weak and fragile,” LBBW analyst Elmar Voelker said.
Voelker pointed to the low current assessment index as indicating a high degree of short-term economic pessimism.
“Nevertheless, with today’s data, there is a good chance that the Ifo business climate for December will also point slightly upwards again,” Voelker added. REUTERS
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