The ECB’s commitment to its primary objective of price stability and its ability to achieve this goal over the medium term are widely recognised by financial markets. A central bank’s credibility in pursuing policy objectives is vital to the preservation of monetary stability.
Although “core” inflation – excluding energy and food products – is lower, the warning signals are growing. Consumer price inflation in the euro area had already reached the highest level since the start of the 1990s in May (3.7 per cent); on the basis of provisional data, it rose to 4 per cent in June. There has been a sharp acceleration in Italy, too.