Eurozone Economic Growth Exceeds Expectations Amid Low Rates and Fiscal Support

Eurozone economic growth continues to surpass expectations, according to Irene Lauro, Senior Economist for Europe and Climate at Schroders. According to Jin10, the region's internal demand is gaining momentum as low interest rates and fiscal support gradually permeate the economy. While overall inflation has fallen below target levels, the European Central Bank (ECB) is largely overlooking this due to the volatility of energy prices. Instead, policymakers are focusing on inflation in the services sector, where rates remain troublingly high. The anticipated end of the slowdown in wage growth this year is expected to exacerbate this issue. The ECB's decision today confirms the view that its next move will be to raise interest rates rather than cut them.