However, the current inflation rates are cause for concern, too. Over the past few months, consumer price inflation has repeatedly reached new highs since the introduction of the single currency. And, in the case of Germany, you have to look far back in history to find inflation rates close to those we are seeing now.
In addition to current cyclical headwinds, monetary policy-makers are faced with at least three longer-term developments that challenge their current monetary policy strategies. First, despite years of highly expansionary monetary policies, inflation has got stuck at a low level. The long-lasting low inflation may have reduced inflationary expectations on a longer-term basis.