However, risks related to global factors, including the threat of increased protectionism, have become more prominent. Moreover, the risk of persistent heightened financial market volatility adds to the downside factors. Against this backdrop, the ECB’s Governing Council carried out a thorough assessment of price and wage pressures and the inflation outlook at its June meeting.
Indeed, expectations of normalization in this country have resulted in higher short- and medium-term market interest rates, giving rise to a flatter yield curve. This, in turn, has led to wider spreads between U.S. Treasuries and European bonds, such as those of German bunds at various maturities.