However, that holds only in the long run. For the short term inflation is also determined by a couple of non-monetary variables. In addition, growth of monetary aggregates can be disturbed by special determinants such as portfolio effects. Therefore, there suitability as indicators may suffer. As a consequence, the ECB-Council pursues a more broadly based approach. A second pillar is added.
In addition, the Governing Council is strongly concerned that price and wage-setting behaviour could add to inflationary pressures through broadly-based second-round effects. First signs are already emerging in some regions of the euro area. In this context, indexation schemes for nominal wages are of particular concern and should be avoided.