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Euro-zone core inflation will remain higher for longer

We are revising up our forecast for core inflation in the euro-zone because the labour market is tighter, demand stronger and inflation expectations higher than we had anticipated. Moreover, fiscal policy will be tightened only gradually and there are significant upside risks to commodity prices. We think the core rate will remain above 2% during 2023-2024, keeping pressure on the ECB to tighten policy.

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