"The impression took hold that inflation rates will nonetheless persist for longer above the rates targeted by central banks," Germany's Bundesbank said in its monthly report published on Monday.
"In particular, the ongoing high wage pressures could make it harder to press ahead with curbing inflation," the publication further read.
Regarding the economic outlook, Bundesbank noted that German growth is forecast to remain largely flat in the third quarter, while private consumption is expected to recover with the industry remaining weak
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