We have revised up our inflation forecasts this week and expect the surge in gas prices to keep inflation above the ECB’s target for longer than previously anticipated. Nonetheless, inflation looks sure to drop back early next year, and the ECB will not be following other major central banks in preparing to raise interest rates anytime soon. Meanwhile, we expect German industrial production and euro-zone retail sales data for August (due next week) to be underwhelming. But other parts of the economy should be holding up better.
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