The European Central Bank (ECB) said in its economic bulletin on Friday that the "inflation outlook continues to be too high for too long" as underlying price pressures remain strong. It said the past interest rate increases are "being transmitted forcefully to euro area financing and monetary conditions" while the lags in transmission to the real economy remain uncertain.
In its assessment of financial and monetary conditions, the ECB said the euro area banking sector has proved resilient in the face of financial market tensions. The rate hikes are being "transmitted strongly" to the financing conditions for firms, households and banks. The latest euro area bank lending survey reported a tightening of overall credit standards, which was stronger than banks had expected in the previous round and suggests that lending may weaken further, the ECB said.
