Press Release: Inflation in the euro area has picked up, but underlying price pressures remain subdued

This Quarterly Report on the euro area concludes that the main reason for the acceleration of inflation in recent months is higher commodity prices, whereas domestically-generated inflation pressures remain subdued. The Report also welcomes the recent milestones in strengthening the economic governance in the euro area as decisive steps to safeguard the financial stability and restore confidence among market participants.

The comprehensive response to the crisis agreed at the European Council on 24 March represents a systemic overhaul of European economic policy, with the creation of the European Stability Mechanism (ESM) and the Euro Plus Pact at its heart. The report shows that raising the capital requirements for banks would be associated with a significant reduction in GDP volatility, but may come at the expense of slightly lower GDP growth in the medium term. Secondly, business survey data reveal that the current recovery remains on track but is nonetheless associated with comparatively weak and unbalanced GDP growth, and shows features on both the consumer and the corporate sides which may weigh on growth over the medium term.

ESO: Background Information: ECB raises rates for first time since 2008 http://www.europeansources.info/record/ecb-raises-rates-for-first-time-since-2008/

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