The euro-zone’s growth outlook is improving thanks to the acceleration in the vaccine rollout and the re-opening of the economy. However, we were surprised at the size of the upward revision to the ECB’s GDP forecasts this week, and we are more downbeat than the ECB on the outlook for inflation. We also think labour cost data for Q1 (to be released next week) will show no signs of wage inflation, and more generally we don’t expect much sign of rising wage pressures in the coming quarters.
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