PMIP Europe Chart 1

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PMIP Europe Chart 2

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What it means for investors

Despite strong growth, low inflation likely means the ECB will not raise rates until 2019. However, tapering of its bond purchases – currently running at €30 billion per month until September – warrants caution on regional interest rate exposure and assets heavily reliant on central bank support. Instead, investors should emphasize rigorous bottom-up research across countries and markets to identify the best investment opportunities.