Energy inflation will fall, but core will stay around 2%

The key event this week (for us at least) is the publication of our forthcoming European Economic Outlook setting out forecasts for 2022 and 2023. In brief, we think the euro-zone will come through the Omicron wave well, but growth will be lower and core inflation higher than the consensus expects, while the ECB will take baby steps towards “normalising” monetary policy. Next week we expect the first PMIs of the new year to show that the economy is still pretty weak, while Q4 GDP data for Belgium, France, Germany and Spain will be consistent with aggregate euro-zone GDP growth coming almost to a standstill. Drop-In (14:00 GMT, 26^th Jan): UK Outlook -- More inflation, more interest rate hikes. Join our UK Economics team for a briefing on the 2022 outlook, including why we’re below consensus on growth but think the BoE will raise rates more than most expect. Register here.