During the same period, extra-euro area trade growth even exceeded that in intra-euro area trade, rising 13 percentage points from 31% to 44% of GDP in 2007. Hence, there is no “fortress Europe”. 1  Several studies have shown how harmful inflation (and inflation volatility) can be.
Let me also remind you that empirical evidence shows there is a negative relationship between inflation and output growth, with a 100basis point permanent increase in inflation being associated with a 10 to 30-basis point decrease in trend output growth (see the May 2008 issue of the ECB’s Monthly Bulletin).