Sentiment indicators remain at very high levels, which suggests that the favourable economic developments we are seeing are here to stay for the time being. Looking at ECB staff projections, GDP growth rates are expected to come in at 2.4% this year, 1.9% in 2019 and 1.7% in 2020.
Despite the fact that economic conditions picked up, price pressures in the euro area remained sluggish. While higher oil prices and the robust upswing did cause inflation to grow much more briskly in 2017 than it had one year earlier, headline inflation slipped again slightly at the start of 2018.