Basis effects from energy prices
Due to basis effects from energy prices, inflation (Nov 2017: 1.8%) might
temporarily slow down at the beginning of the year and might even be slightly
below the average of 2017 in 2018 as a whole, at 1.6% (2017: 1.7%). The
upcoming wage round and resilient demand combined with the global decline in
free capacities might, however, push up prices more strongly than currently
We expect the ECB to stop its bond purchases completely by the end of 2018.
Another six months are likely to pass in 2019 before the first rate hike of 25 bp.
If the Italian elections go without a hitch and the economy continues to expand
strongly, the path towards this rate hike is free, particularly if lending picks up.