The paper examines the reasons for the increase in inflation in the euro area between 2021 and 2022. It also discusses the exceptional response of the ECB's monetary policy and the prospects for inflation in 2024.
The sharp rise in inflation in the euro area in 2021-2022 was due to supply-side bottlenecks and a marked increase in energy prices. The ECB's monetary policy response helped to prevent the de-anchoring of long-term inflation expectations, contain the risk of a wage-price spiral, and to achieve the return of inflation to the 2 per cent target.
