Survey data for March added to the evidence that euro-zone growth gained pace in the first quarter. Meanwhile, headline consumer price inflation fell in March and appears to have passed its peak, suggesting that the drag from higher inflation on real incomes and spending growth this year should not be too severe. Core inflation fell despite healthy economic activity and, while it may edge back up in April, it looks set to remain pretty subdued. This supports our expectation that the ECB will carry out its planned asset purchases this year and keep interest rates at rock bottom levels for a long time to come.
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