In 2010 monetary policy operated in an environment characterised by the economic recovery in the euro area on the one hand and a persistence of tensions infinancial markets on the other. The recovery in the real economy during 2010 turned out to be somewhat stronger than expected. This was partly related to the recovery in the world economy, but domestic developments also contributed to the prevailing positive momentum.
Overall, euro area real GDP increased by around 1.7% in 2010, following a decline of 4.1% in 2009. As regards prices, inflation rates increased in the course of 2010, mainly reflecting rises in global commodity prices. At the same time, underlying domestic inflationary pressures remained moderate. As a consequence, the average annual inflation rate rose to 1.6% in 2010, up from 0.3% in 2009. […]
