Eurozone inflation is expected to reach 1.6% in 2025, reflecting the impact of lower energy prices and a weak demand environment.
Analysts at Bank of America believe this will be most evident in the chronic output gap and overly restrictive policy mix.
Despite these challenges, the possibility of a comprehensive European fiscal policy reform or German-led rethink may offer upside potential, although these remain uncertain given the current political and economic climate in the region.
