In particular, there is a very strong concern in the Governing Council that higher energy and food prices may lead to the emergence of broad-based second-round effects in price and wage setting, which in turn could add significantly to inflationary pressures.
All parties concerned are called upon to contribute to avoiding broad-based second-round effects, as this is essential to ensure that longer-term inflation expectations remain firmly anchored in line with price stability. In this context, the Governing Council is concerned about the existence of nominal wage indexation schemes, as they involve the risk of triggering an inflationary wage-price spiral.