While euro area headline inflation has increased markedly over the past year, underlying inflation is expected to continue to remain subdued. A very substantial degree of monetary accommodation is still needed to secure a sustained return of inflation rates towards levels below, but close to, 2% – in line with the ECB’s mandate.
In order to reap the full benefits of our monetary policy measures, actions in other economic policy areas are necessary to strengthen long-term growth and resilience in the euro area. The euro area’s ongoing economic expansion is being largely driven by domestic demand, with both private consumption and investment contributing to growth. Real GDP rose by 1.7% in 2016.