Second-round effects are also starting to show up in services inflation, with categories such as restaurants and hotels as well as public transport rising significantly. Other key services components such as insurance and housing inflation are starting to normalise from their recent lows, with insurance inflation averaging 6.4% in the recent outcome (February) compared to 3.1% at the same time in the previous year.
I will argue that the nature and properties of the shocks that have been hitting the euro area over the past few years require central banks to exercise more patience in reaching their inflation aim, in particular when approaching the effective lower bound.