Economic activity has remained stronger in the euro area, although an easing in the growth rate is expected in the short-term before a recovery towards its potential growth rate of about 2 per cent. The risks to the growth outlook are probably on the downside, however, in all of these economies.
Another negative outcome of these events is, of course, the sharp upward pressure on headline inflation rates globally. Central banks are very focussed on this issue and are particularly concerned that the rise in commodity prices does not spread out into higher inflation generally.