Underlying inflation – which relates more to domestic price pressures – continues to remain very subdued and has yet to show clear signs of trend inversion as unutilised resources still weigh on wage and price growth. For example, the annual rate of HICP inflation excluding food and energy has mostly remained below 1% since late 2013.
Finally, it is important to recognise that despite the adverse temporary effects of the crisis on the integration of financial markets, the high degree of financial integration achieved in the euro area before the eruption of the crisis helped contain its impact on the financial system and the broader economy.