ECB Wants No Downward Pressure From Euro's Movement
According to the ECB research article, recent appreciation of the single currency might continue to be the reason for slow inflation, but increased pricing power of companies will offset that. The document concluded: "The appreciation from mid-2017 might still be relevant for some quarters to come," And: "The exchange rate pass-through may be difficult to detect if it is offset by a confluence of other factors, including increased pricing power for firms."
The euro rose more than 4% versus the greenback, comparing with 2017. And yet, the common currency fell around 7% comparing to its maximum in Q1.
Prices of non-energy industrial products get the biggest impact from euro’s dynamic. But, producer price inflation wasn’t that sensitive to downward pressure from the currency’s movement, which is a good thing. ECB expressed the hope that downward pressure from the exchange rate won’t be noticed.