MNI BRIEF:ECB Must Look Past Supply-Side Infl Effect: Bulletin

Policymakers at the European Central Bank will need to look past supply-side effects "to gain a clearer picture of the disinflationary demand effects that inevitably come with income losses and uncertainty," according to a staff research paper in this month's edition of the bank's Economic Bulletin, published Monday.

Additionally, recent research posits that supply effects could morph into larger negative demand effects post-pandemic, the article notes. Alongside that, the paper adds that although generally weaker, pre-pandemic, non-commodity-related supply effects (e.g. technology shocks) are an ever-present factor in price dynamics.

In a recent interview with MNI, National Bank of Lithuania Governor and ECB Governing Council member Martins Kazaks said discussions over when and how monetary conditions should start to tighten will come into greater focus as the Covid-19 crisis eases.