Euro-zone holding back recovery (again)

Global growth is likely to accelerate slightly next year but to remain well below its pre-crisis average. Strong recoveries in the US and UK will be offset by near-stagnation in the eurozone and Japan. Lower commodity prices should drag headline inflation down everywhere in the coming months, but core inflation should remain higher, other than in the euro-zone. We expect the Fed and Bank of England to begin raising interest rates early next year, with the Fed likely to hike further and faster. But the ECB and BoJ will probably announce additional policy easing. There is little prospect that growth in the key emerging economies will re-accelerate any time soon.