However, I believe that, in the light of recent developments in the labour market, the increase in the rate of utilisation of the labour force, and indications of a slight pick-up in trend productivity growth, the potential growth of the euro area economy over the next couple of years might be somewhat higher, but only marginally: it remains close to, though possibly slightly above 2.0%.
This is particularly true for the longer forecasting horizon, confirming the claim that monetary development is key to understanding inflation in the long run. In a recent Bundesbank discussion paper, Boris Hofmann shows that the relationship between money and prices seems to continue.