The European Central Bank should not raise interest rates yet, given the current environment of uncertainty, weak growth, subdued wages, and high market rates. There is no convincing evidence of entrenched higher inflation.

<p>Against a backdrop of acute uncertainty, weak growth, subdued wages, and elevated market interest rates, monetary tightening is warranted only when there is convincing evidence that higher inflation is becoming entrenched. No such evidence has yet materialized in Europe.</p>