This is also related to those countries becoming more competitive by keeping wage growth in check. This, too, dampened price pressures. The ECB estimates that domestic factors such as these have lowered core inflation by up to one percentage point relative to the United States.1 On top of domestic factors came commodity prices: 2014 saw the beginning of a steep decline in oil prices.
Much of the current hiking cycle has been about preventing secondround effects from manifesting, in turn preventing the need for steeper, more rapid interest rate increases later on. Second-round effects relate directly to central bank credibility.