Economic Policy Panel: What can keep Euro area inflation high?

The invited policy session of the 76th Economic Policy panel meeting featured Ricardo Reis of the London School of Economics presenting new research on inflation in the Eurozone in the second half of this year. The event was hosted by the German Federal Ministry of Finance and took place on Thursday 20 October 2022, at 16:30 (CEST).

He explored what obstacles can prevent an inflation-targeting central bank from achieving its target within two or three years, starting from inflation that is high but far from hyper-inflation. His analysis focuses on several potential barriers to returning to the European Central Bank’s inflation target – persistent supply shocks; unanchored inflation expectations; tailwinds from fiscal policy; fiscal dominance; and loss of independence – how likely each one is, and how or whether it can be overcome.

Following the presentation, there was a panel discussion featuring Agnès Bénassy-Quéré (French Treasury), Olivier Blanchard (MIT and Peterson Institute for International Economics), Wolf Heinrich Reuter (German Federal Ministry of Finance) and Federica Romei (University of Oxford), moderated by Tim Phillips of CEPR.