Second Round Effects: A False Sense of Security? The European Central Bank (ECB) has been closely monitoring inflation, with its governing council members voicing concerns.
However, outgoing member Francois Villeroy de Galhau's recent comments on second round effects in the euro area economy suggest a broader complacency that may come back to haunt policymakers.
Villeroy's assertion that energy costs haven't yet turned into second round effects is welcome news for those worried about inflation, but it also raises concerns.