theoretical considerations are on shaky ground, the empirical findings argue against them, too. in a larger and more liquid euro capital market, the reallocation of assets does not necessarily lead to increased exchange rate fluctuations, and a generally increased exchange rate volatility has not been observed so far either. on the contrary, measured in terms of the standard deviation of daily percentage changes, the average volatility of the euro ’ s rate against the us dollar between january 1999 and may 2000 was actually somewhat lower than the volatility of the d - mark against the us dollar between 1991 and 1998. in concluding, i would like to emphasise that although the interests of europeans and americans may differ here and there, i do not see any fundamental differences, at least not in the economic fields that i have just discussed : smooth balance of payments financing, higher growth rates in europe, stability of the financial system and flexible exchange rates between the major currencies. i think most europeans would subscribe to these objectives as well. however, emu will not automatically help to achieve these objectives. consequently, major challenges for european and american policymakers still exist, some of which could be dealt with by competing for better policies. others, such as maintaining the stability of the global financial system, argue in favour of closer cooperation. at many levels - for example, the imf, the financial stability forum, the bis - such cooperation actually takes place without being ultimately hampered by the complex political structures in europe. competition and cooperation will presumably remain the salient features of transatlantic relations in the foreseeable future. interpreted as the struggle for the best solutions and by assuming joint responsibility, these two guiding principles - competition and cooperation - might complement each other almost ideally.

’ s not forget that their purchasing power was higher in 2020 due to the temporary cut in vat rates. and there are yet more special factors driving the increase in price inflation : the climate package, increased crude oil and food prices, and a statistical one - off effect in the case of package holidays are just three i could mention. but these factors will only give inflation a temporary boost. short - term imbalances between supply and demand might also be a factor once the economy opens up again across all sectors. an example of this can be seen in the industrial sector, where a surprisingly brisk global recovery has caused bottlenecks in many areas that are now limiting production. commodity and material prices as well as transport costs have risen sharply, and inflation is already showing up very clearly in the producer prices for intermediate goods. these price pressures are likely to spill over to consumer prices as well, albeit to a lesser degree and with a time lag. moreover, industrial goods only make up around one - quarter of the basket of consumer goods. however, individual services, too, might see bouts of stronger demand for a restricted supply once the consumption backlog clears. how much consumption, when and for which goods exactly households intend to catch up on remains to be seen. and nor is it by any means certain that enterprises will then capitalise on any scope to raise their prices. either way, catch - up effects would probably not drive up inflation for good. for inflation to become persistently too high, it would be crucial for second round effects – in the form of much stronger wage growth or noticeably higher inflation expectations – to be at play. there are currently no signs of this, however. this is why our experts are expecting inflation rates in germany to be back below 2 % over the next few years. that said, this is an outlook where risks are skewed to the upside. 3 price outlook in the euro area the eurosystem staff macroeconomic projection sees prices in the euro area following a similar 2 / 5 bis central bankers'speeches pattern : the inflation rate could rise above 2 % in the coming months before easing to averages of 1. 5 % in 2022 and 1. 4 % in 2023. 4 the flat path expected over the next two years conceals the fact that the economic recovery is gradually strengthening the underlying upward pressure on prices, as this is more than offset by declining energy inflation. the forecast is based on the technical assumption that crude oil prices will fall, as