KOF Monetary Policy Communicator, April 2022

The Governing Council reinforced the expectation that net asset purchases under the asset purchase programme (APP) will be concluded in the third quarter.

According to Eurostat, Euro area annual HICP inflation was 7.5% in March up from 5.8% in February. This increase was primarily caused by higher energy prices, which are also the main reason for the elevated inflation rates. Food prices have also increased because of high transportation and production costs. Supply bottlenecks and the normalisation of demand in reopening sectors also put upward pressure on prices. Measures of underlying inflation have risen to levels above two per cent in recent months. While the labour market continues to improve, wage growth remains muted but should increase as the economy returns to normal utilisation. Initial signs of above-target revisions in long term inflation measures warrant close monitoring. Upside risks to inflation have intensified.