While Russia-Ukraine tensions escalated further still this week, the economic spillovers to the euro-zone are likely to be limited and are therefore unlikely to change the ECB’s policy assessment. Indeed, comments from various ECB officials suggest that amid high inflation and growing wage pressures a consensus is building on the Governing Council to normalise policy gradually. Meanwhile, next week brings the first February business surveys which we expect to show some improvement thanks to the improvement in the Covid situation.
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