European Central Bank Governing Council member Pablo Hernandez de Cos in an article in Spain's La Ra
  • Employees bearing a considerable loss of purchasing power in recent quarters
  • If inflation persists it's more likely to feed into wage negotiations and trigger second-round effects
  • Natural interest rate is relatively low in the eurozone, near 1% or slightly above
  • It is essential that inflation expectations be anchored at 2% target
  • It's not optimal to pre-commit
  • Greater persistence and intensity of inflation has driven up the likelihood of direct and indirect second-round effects

These comments are all hawkish and with inflation running at 8%, you can see why. There's a growing belief that rate hikes are needed to curb inflation in order to promote a sustainable expansion.