Economic activity in eurozone to remain well above trend in 2018 - Nomura

Analysts at Nomura explained that they expect economic activity in the eurozone to remain well above trend in 2018 and well above consensus. 

Key Quotes:

"Core inflation should grind higher in the coming months as output gaps close and wage pressures firm."

"We believe the ECB will start to lift policy rates toward the end of 2018, sooner than the market expects."

"UK growth will be Brexit-dependent; we expect a two-year EEA-style transition and eventually a Canada-plus style free trade deal."

"Near-term: slow UK domestic demand growth as above-target inflation and political uncertainty dominate stronger net exports."

"We expect UK GDP growth to be broadly stable at 1.5% in 2018 and 2019, with inflation falling as the FX impact wanes in 2018."

"We expect two BoE rate hikes in 2018 (May and November), a pace we think will continue in 2019 – faster than markets think."