ECB: Easing of inflation raises pressure – BNP Paribas

“The pass-through of wage growth to prices is stronger and faster when inflation is higher to start with,” BNP Paribas analysts point out and move on to explain why the easing of inflation ramps up the pressure on the ECB to take action:

“The low inflation in the Eurozone has slowed down the transmission. The considerable growth slowdown, on the back of adverse foreign demand and uncertainty shocks, impairs this process even more.”

“This raises pressure on the ECB to take action in order to dislodge core inflation, which remains stuck well below its objective.”

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