- Inflation in the eurozone is high and well above the 2% target set by the European Central Bank.
- The current high inflation rate is to a large extent driven by pandemic-related factors and energy price increases related to the Russia-Ukraine war. We also observe that inflation expectations have not yet decoupled from the ECB’s official target rate. This makes us to believe that inflation will come down in the short term. A simple calculation exercise confirms this picture.
- We conclude that inflation projections in the medium term have not yet sprung loose from the official ECB target and the current moderate intervention policy appears justified.
Find the whole report here: https://atradius.ca/reports/economic-research-inflation-expectations-yet-to-decouple-from-ecb-target.html