The first is the contribution of stretched asset prices to vulnerabilities in the financial system, which may in turn trigger future crises. The second is the part they may play in creating a disparity between public perceptions of inflation and official measures. That disparity can undermine public support for our unconventional measures and eventually erode trust in the ECB.
But many Canadians are still struggling to manage the rising cost of living, and prices of many things that people need to buy are still rising too quickly. Food price inflation is just under 10%. We expect food price inflation to come down in the months ahead, but services price inflation will take longer.