European Central Bank’s (ECB) policymaker Pablo Hernandez de Cos said on Wednesday, “withdrawal of fiscal support measures could make inflation more persistent.”

Additional quotes

‘Lower gas prices will eventually trigger reverse transmission on inflation.”

“The upward effects of energy and food commodity prices could still be significant in 2023.”

“Data, gas price developments point to inflation falling more strongly in the coming months than envisaged in December.”

“Recent data on euro area inflation and some of its key determinants are somewhat encouraging.”

Market reaction

At the time of writing, EUR/USD is trading 0.22% lower at 1.0709, undermined by a broad-based US Dollar strength.