Euro area economic growth likely to accelerate to 1.9 pct in 2017, inflation to reach 1.5 pct

The global economic environment continues to be solid, while the U.S. Fed continues to slowly tighten its monetary policy as expected. On the contrary, the European Central Bank maintains its monetary policy stance for now.

An offsetting move in the U.S. is expected following the subdued first quarter, noted Erste Group Research. The manufacturing sector in the nation is signalling strength, while the U.S. consumer spending growth momentum is expected to be slightly subdued in 2017. The U.S. economic growth is likely to average 2 percent in 2017.

Meanwhile, in the euro area, political risks have reduced after the French presidential election. Based on leading indicators, the euro area economic growth is expected to accelerate slightly in the second and third quarters to around 2 percent year-on-year, stated Erste Group Research. The euro area economic growth is mainly underpinned by investment spending and private consumption. For the whole of 2017, the euro area economy is expected to expand 1.9 percent, while inflation is likely to moderate because of base effects related to energy prices.

“We expect s headline inflation rate of 1.5 percent in the euro zone this year, and a core inflation rate of 1.0 percent”, added Erste Group.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was bearish at -76.6361, while the FxWirePro's Hourly Strength Index of Euro was slightly bullish at 65.4168. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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