The ECB’s decision to reduce its monthly asset purchases from January largely reflected growing optimism that euro-zone inflation will rise towards the target of below, but close to, 2%. Indeed, the latest surveys suggest that underlying price pressures are building and wage growth is rising.
But the ECB wants to see these measures of underlying inflation rise further and across the whole eurozone, which is not currently the case. And with core inflation set to rise only gradually over the next couple of years, we think that the ECB will proceed very cautiously with policy normalisation.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services