Euro Area – Growth engine running on more cylinders
|The euro area economy has grown faster than expected this year despite tariff uncertainty, and the labour market remains resilient. We expect the decent growth to continue in both 2026 and 2027 driven by rising real incomes and investments. We see risks to the outlook as balanced.
Inflation has returned to the 2% target and is expected to fall below target in both 2026 and 2027. Declining wage growth and the strengthening of the euro is expected to also drive core inflation below target. We consider the risks to the inflation outlook as balanced.
We expect the ECB to keep the policy rate unchanged at 2.0% in both 2026 and 2027. While inflation is expected to undershoot the 2% target the decent growth outlook, tight labour market, and anchored long-term inflation expectations should keep the ECB from lowering rates further.
Download The Full Research Euro Area
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.