I expounded the reasons for sluggish productivity growth in the euro area in a recent lecture. See J.-C. Trichet (2007), “Productivity in the euro area and monetary policy,” special lecture delivered at the 22nd Annual Congress of the European Economic Association (Budapest, 27 August).
Looking further ahead, however, the information available so far does not suggest that stronger underlying inflationary pressures are building up in the euro area. Wage increases have remained limited since the last quarter of 2003, and this trend is expected to persist in the context of ongoing moderate growth and weak labour markets.