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Eurozone Inflation Slows, but Underlying Price Pressures Persist



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Why It MattersEurope’s economy, though more resilient than many forecasters had predicted, has still significantly weakened over the past 12 months, with a drop in inflation-adjusted wages and consumer confidence. Growth is expected to pick up, but further increases in interest rates could act as a brake on the economy.Gita Gopinath, first deputy managing director of the International Monetary Fund, said this week that an “uncomfortable truth” is that central banks must remain diligent about bringing down inflation rates “even if that means risking weaker growth.”The same message is coming from the E.C.B., which has already signaled the likelihood of rate increases in July and September. Speaking this week at the central bank’s 10th annual conference in Sintra, Portugal, Christine Lagarde, the E.C.B.’s president, said: “Inflation in the euro area is too hi …

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