Monetary policy: ECB Vice de Guindos: Core inflation is slowly easing

The European Central Bank (ECB) pays close attention to underlying inflation trends. They are an important factor in determining monetary policy in the euro zone. Most recently, headline inflation in the 20-nation community eased to 5.5 percent in June from 6.1 percent in May. This means that the euro watchdog’s inflation target of two percent is still a long way off. Core inflation, which excludes volatile energy and food prices, rose slightly to 5.4 percent from 5.3 percent in May. Many currency watchdogs are concerned about this. The high core rate is causing concern, said Bundesbank President Joachim Nagel on Thursday in Stuttgart. “The surface of our engine isn’t quite as hot anymore, but the core is still overheating and needs further cooling,” he noted.