The eurozone emerged from a recession in the first quarter of this year, beating analyst expectations, fresh data published by Eurostat showed on Tuesday.
Gross domestic product (GDP) in the 20 countries that share the euro currency increased by 0.3 per cent quarter-over-quarter during the period January-March for a 0.5 per cent annual rise, the data showed. Economists had predicted growth of 0.2 per cent for both periods. “Today’s stronger-than-expected Q1 GDP data means the eurozone has come out of recession but, with core and services inflation both declining in April, this will not prevent the ECB from starting its easing cycle in June,” said Andrew Kenningham of Capital Economics.
Separately, in the US, at the end of a monetary policy meeting on Wednesday, the Federal Reserve (Fed) left interest rates unchanged and said it may take some more time before cutting interest rates, as stubborn inflation removes the need for policymakers to cool the economy.
The benchmark short-term interest rate remained in a targeted range between 5.25 - 5.50 per cent, at the level it has been since July 2023, when the central bank last raised interest rates, taking them to the highest level in more than two decades.
During this week’s meeting, the Fed also decided to slow down the pace it is reducing the massive bond holdings on its balance sheet, in what could be seen as a move to counter high interest rates.
The bank’s policymakers still believe the current policy rate is putting enough pressure on economic activity to bring inflation under control, Fed chair Jerome Powell said at a press conference after the meeting.
Finally, UK house prices fell in April as affordability concerns kept potential buyers away from the market, according to mortgage lender Nationwide.
House prices fell by 0.4 per cent between March and April, coming on the heels of a 0.2 per cent decline in March and missing the increase of 0.2 per cent expected by economists. This was the largest month-on-month contraction since August 2023, when mortgage rates reached their peak.
Robert Gardner, Nationwide’s chief economist, said: “The slowdown likely reflects ongoing affordability pressures, with longer-term interest rates rising in recent months, reversing the steep fall seen around the turn of the year.” He added: “House prices are now about four per cent below the all-time-highs recorded in the summer of 2022, after taking account of seasonal effects.”
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