Why the recent jump in eurozone inflation has not changed the monetary policy outlook

The recent surge in US headline and core consumer price inflation rates has intensified the spotlight on reflationary risks and their potential monetary policy implications. For various reasons, the circumstances in the US and eurozone are different and we explain why below, starting with the four key factors which have led to a record pick-up in eurozone inflation over the first four months of this year. A perfect storm The first, energy inflation, is by far the most important, contributing just over 1.6 of the 1.9 percentage point pick-up in HICP inflation between December 2020 and April 2021 (Chart 1). The rebound … (full story)

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