Although we assume in our baseline scenario that inflation will fall back below 2% in the medium term, we are very diligently monitoring whether the underlying forecast assumptions might not underestimate the possibility of higher inflation over the coming years. As inflation expectations are still low, the prospect of persistently excessive inflation, as feared by some, remains highly unlikely in the euro area.
The real question is whether we can reach our inflation target of 2% any sooner than we are now forecasting. Inflation of 2% in the medium term would be good news for the euro area. It would pave the way out of the low interest rate environment.