Economy Watch: European View—April 2024

Improvements in business and consumer sentiment add to evidence that the Euro Area economy is most likely going to pick up pace in Q1. Encouraging news is also coming from the inflation front, where both headline and core inflation fell more than expected in March. The ECB is now closer to cutting its main policy rates, likely starting in June. While a first cut in August is still our baseline scenario for the BoE, a June cut is still possible. Fresh (April) wage data in May and any forward guidance from BoE’s May meeting will shed more light on when the first hike materializes. All things considered, we make no changes to our forecasts. Activity in the Euro Area is on track to pick up in H1, but we still do not expect any meaningful growth before H2 of 2024.