Inflation risk premium for the EUR is no longer justified, in the view of economists at Commerzbank.
“We are convinced that there is an inflation disadvantage for the Euro. For this reason, we forecast falling EUR exchange rates from 2024 onwards. But this forecast is based on considerations that are not currently shared by the market. For example, we expect inflation in the euro area to be higher than in the US over the long term – a reversal of past conditions and something that is not priced into the market's inflation expectations.”
“Our forecast of a strong Euro until year-end assumes that our economists’ point of view will only slowly take hold and will only put pressure on the European single currency from 2024 onwards.”
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