These moves were motivated by two considerations: (1) ensuring that the inflation that had started to decelerate in the second half of the 1980s would continue to be contained; and (2) the statistical relationship between monetary stock (or exchange rates) and inflation had become unstable, making it necessary for these central banks to adjust their monetary policy frameworks.
Euro area annual HICP inflation was 2.7% in February 2012, according to Eurostat’s flash estimate, slightly up from 2.6% in January. Looking ahead, inflation is now likely to stay above 2% in 2012, mainly owing to recent increases in energy prices, as well as recently announced increases in indirect taxes.