The aim of this paper is to provide econometric tools to analyse and forecast in‡ation dynamics in the Euro area, starting from a small-scale cointegrated VAR system. In order to supply information on the long-run in‡ation trend, a forward-looking “core” in‡ation measure is constructed. This measure is based on long-run relations among major macroeconomic variables, bearing the interpretation of a long-run in‡ation forecast. The proposed measure may be particularly suitable for the “two-pillar” monetary policy strategy of the ECB which focuses on medium-term in‡ation prospects. J.E.L. classi...cation: C32, E31, E52.