MNI BRIEF: Inflation Peak 8% With No Errors- ECB's Lane
MNI (LONDON) - The euro area’s 2021-22 inflation surge would have peaked at “around 8%” instead of 10% if the European Central Bank had avoided forecast errors in its inflation outlook, ECB’s executive board member Phillip Lane said in a speech on Monday, adding that in hindsight earlier and more aggressive hikes were called for.
He stated that the errors were driven by unanticipated energy price shocks but that multiple changes in the transmission to prices also played an important role, increasing the size and persistence of the inflation surge, he said.
“Without the benefit of hindsight, the model-based analysis indicates that monetary policy was set in a broadly appropriate manner during 2021 and 2022, given the real-time information available to policymakers”, he said.