Last but not least, in the course of 2004, planned increases in indirect taxes and administered prices in some euro area countries will have an upward impact on inflation. However, when taking into account more lasting factors, we continue to expect inflation rates to moderate over the medium term and to develop in line with price stability.
This expectation is based on the assumption that wage developments will not be affected by the current inertia of inflation rates, and will remain moderate in the context of a gradual economic recovery. Moreover, the past  BIS Review 47/2003  1  appreciation of the euro should continue to dampen price pressures. These views are also reflected in recently released forecasts.