Having slowed almost to a halt in Q3, early indications suggest that the euro-zone’s economic recovery is unlikely to have regained much momentum – if any – in the final quarter of the year. Meanwhile, the continued strength of the euro exchange rate is adding to the disinflationary pressure already being exerted by the large amount of spare capacity in the economy and extremely weak monetary dynamics. Against that background, the pressure on the European Central Bank to follow its recent cut in interest rates with additional action to support the economy looks set to continue to build.
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