European Central Bank (ECB) Governing Council member Pablo Hernandez de Cos said on Monday that if inflationary pressures persist, they are likely to feed into wage negotiations and trigger second-round and indirect effects on inflation, reported Reuters. These second-round effects have not yet materialised, with the latest data on wage settlements pointing to employees bearing a considerable loss of purchasing power in recent quarters. 

The natural rate of interest is relatively low in the euro area, de Cos continued, hovering around or slightly above 1.0% and this would suggest that, until these levels are reached, the ECB's monetary policy stance will continue to be expansionary, at least from a long-term perspective. 

In order for us to adopt a gradual normalisation approach, it is essential that inflation expectations remain anchored at the 2.0% target, he added. Moreover, it is not optimal to pre-commit to any specific interest rate path, much less in the current uncertain context.