The challenge we now face is to take advantage of the global upswing and lift demand up to and beyond current potential, thereby re-anchoring expected medium-term inflation at levels consistent with our target of 2%.
But on our current policy trajectory, the likelihood that demand in the euro area will be strong enough to test the supply constraints of the economy – beyond short-term bottlenecks – does not look as high as in the United States. Euro area inflation will rise this year.