The euro has risen to a session high and yields have risen after European Central Bank (ECB) President Mario Draghi said Monday that underlying inflation in Europe looks set to rise.
Speaking at the Economic and Monetary Affairs of the European Parliament hearing in Brussels, Draghi said: "Underlying inflation is expected to increase further over the coming months as the tightening labor market is pushing up wage growth."
Following the speech, Germany's 10-year bond reached 0.514 percent, according to Reuters data. That's the highest level since mid-June.
The euro rose 0.6 percent, surpassing 1.18 versus the dollar.
While annual rates of harmonized European inflation are tipped to sit at around 1.7 percent until 2020, the ECB projects core inflation, excluding food and energy, to reach 1.8% in the same year.
Draghi said the stable profile masked an underlying picture of a slowing contribution from non-core components of the general index and a "relatively vigorous pick-up in underlying inflation."
The ECB announced interest rates would remain unchanged earlier this month.