To contain inflation, it has already raised the target range for the federal funds rate five times for a total of 3 percentage points since the turn of the year, with a view to suppressing demand (Chart 6). In the euro area, the inflation rate has risen to roughly the same level as in the United States, but for different reasons.
The main cause of inflation has been cost-push factors, such as surging energy prices, and demand has not been that strong. However, the European Central Bank is concerned about a risk that significantly high inflation will push up people's inflation expectations and consequently lead to runaway inflation through firms' higher wage setting.