The surge in euro-zone government bond yields this week has ruffled the feathers of the doves at the ECB, who are keen to look through short-term upward forces on inflation. The still-high number of virus cases, the potential reimposition of restrictions and the comparatively leisurely pace of the vaccine rollout raise the risks of a later and slower economic rebound, making a supportive ECB all the more important. Next week we expect data to show that euro-zone core inflation fell back in February.
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