Overall, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium term1. The euro area economic expansion is strong and broad-based. Real GDP in the euro area has expanded for 19 consecutive quarters, growing by 2.7% year on year during the fourth quarter of 2017, according to preliminary data.
This compares with the latest potential growth estimates for the euro area of around 1.5%.2 The latest economic data and survey results point to continued growth momentum at the end of last year. The composite output Purchasing Managers’ Index – which correlates closely with growth in the euro area – remains above its long-term average and is close to a 12-year high.