The undervaluation of the euro is giving cause for concern that it might have adverse implications for the world economy, including the risk to price stability in the euro area that it entails. Adhering to its mandate and following its forward-looking strategy, however, the Governing Council will ensure that price stability can be maintained over the medium term.
The conditions of a further rise in prices are also beginning to materialize, judging from (1) the rise in prices of goods traded among firms, reflecting increases in commodity prices such as crude oil prices, (2) the tightening of labor market conditions, and (3) the government's various efforts toward improving firms' productivity and increasing wages.