- During the last months, inflation fears have returned to markets, notably in the US, which have spilled over to the euro area. Looking at both external and domestic drivers of inflation, we try to shed light on the question whether a regime-shift in core inflation is underway in Europe following the corona crisis.
- Overall, we find limited evidence that euro area core inflation is about to return to the highs preceding the Global Financial Crisis on a sustained basis. However, we have lifted our core inflation forecast for 2022 to 1.2% (1.0% previously), mostly on the back of higher goods price inflation
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