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Tempering the optimism

Market moves over the past fortnight show that investors are becoming more optimistic about the euro-zone economy, but we are less bullish on the growth outlook. Meanwhile, the recent acceleration in services inflation in Germany is mostly due to public transport and is unlikely to last, but underlying price pressures remain quite strong. Next week, the ECB will leave monetary policy unchanged and we expect it stick to neutral language about future interest rate decisions.

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