A high degree of inflation persistence could make monetary policy much more difficult because monetary policy measures need a long time to affect the rate of inflation. The longer this transmission lag, the higher the probability of additional shocks hitting the rate which could render this policy measure ineffective or even inappropriate.
Furthermore, demand for exports should benefit from the ongoing global recovery. However, although labour markets have shown some further signs of improvement, unemployment remains high in the euro area and, overall, unutilised capacity continues to be sizeable.