A deluge of data this week has underlined how weak economic activity is in the euro-zone but offers some hope that core inflation may be easing. Meanwhile, we do not expect the ECB’s new analysis of the neutral rate to provide a precise view and that incoming data will be the main driver of decision making. We still expect ECB to cut rates to around 1.5% by the second half of the year. Next week we expect to learn that core inflation in the euro-zone edged down in January and we will be watching out for another vote of confidence in France.
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