Comments from De Guindos:
- Long-term inflation expectations are low
- There are signs of tight labor market
- Current low unemployment rate and the recent wage increases do not necessarily imply that higher inflation is around the corner
- Structural changes are underway in advanced economies that imply that the pass-through may be on the decline
- Monetary policy decisions need to be based on a wide-variety of economic indicators, not just the unemployment rate and wages
Translation: Our tools don't work and our view of how inflation works was wrong.