This correction – and the corresponding sustained period of relatively low inflation – is, of course, fully justified and most welcome. It also shows that adjustment mechanisms in the euro area work. A higher degree of wage flexibility would help to accelerate such desirable adjustment processes. At the other extreme, some countries may, to some extent, be catching up with others’ higher living standards.
Thereafter, supported by our monetary policy measures and the expected economic recovery, inflation rates should recover further in 2017 and 2018. Turning to the monetary analysis, broad money (M3) continued to grow at a robust pace in February 2016, with its annual rate of growth remaining unchanged at 5.0%.