Luis de Guindos Vice President of the ECB signals high inflation for 2022, contradicting the ECB’s previous statements that inflation will be only transitory.
On Monday, he said in an interview with radio station COPE: “Our inflation is more persistent and, let’s say, not as temporary as we expected.”
Even before the pandemic, the ECB had set an inflation target of 2% per year, which has not been reached for a long time. With the helicopter money since the beginning of the pandemic, this has now turned around. Inflation in the eurozone has risen to historic record levels in many countries. For 2022, the ECB is giving an inflation forecast of over 3%, leaving the room for upside wide open.
Since this statement is only a snapshot and the effects of Omicron and other variants cannot yet be predicted, the inflation story may slide far beyond 2022.
Naturaldeposit has already pointed out the dilemma for central banks in an earlier article.