Germany's central bank noted in its monthly report, issued on Monday that some of the factors supporting the euro area's economy are making it more difficult to achieve the inflation targets.
The Bundesbank admitted that the labour markets in the region continue operating at high capacity while wage growth remains brisk and prices are rising strongly, especially in the service sector. "Inflationary risks also predominate on the supply side," it added.
The German central bank argued that the European Central Bank's (ECB) further interest rate cuts should be carefully considered in light of current data.