Mario Draghi, the president of the European Central Bank (ECB), hinted at the possibility of inflation not rising as quickly as expected due to euro zone firms dealing with a slew of uncertainties.
"If firms start to become more uncertain about the growth and inflation outlook, the squeeze on margins could prove more persistent," Draghi said at a banking conference in Frankfurt Friday.
"This would affect the speed with which underlying inflation picks up and therefore the inflation path that we expect to see in the quarters ahead."
Draghi's speech was generally positive about the region and he reiterated that the central bank's massive crisis-era bond-buying scheme is still due to be wound down at the end of this year. He said there was no reason why the current expansion in the euro area — which is now in its fifth year — should abruptly come to an end, adding that the economic cycle was resilient.
German bond yields rose on Friday on the back of these comments. The country's 10-year bond yield rose to session highs at 0.376 percent, extending earlier rises, according to Reuters.