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Low equilibrium rates will limit ECB policy tightening

Equilibrium real interest rates in the euro-zone appear to be below zero and lower than in most other advanced economies. We expect them to stay that way. While the ECB is likely to raise interest rates sooner and further than most economists expect, this low level of equilibrium rates is a key reason why we think policy rates will not rise as far as they will do in other advanced economies.  

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