With this economic outlook widely shared by the public, the market has been focusing on the timing of monetary tightening – which is expected to be sometime in 2015 – and its pace (Chart 2). In Europe, by contrast, the adjustment pressure mainly associated with the debt problem remains and a downtrend in the inflation rate has been observed.
Household and business sentiment has become cautious, as manufacturing in Germany – the core country of the region – saw a temporary drop during the summer, partly due to the economic deceleration in Russia.