The ECB Has Far Worse Troubles Than Inflation
Europe is still more worried about chronic long-term deflationary pressure, and the strength of the euro versus the dollar.
A basket of European goods.
Photographer: picture alliance/picture allianceBreak out the ticker tape — it’s happened at last. It took an unprecedented pandemic stimulus package to do it, but euro-area inflation has reached the European Central Bank’s eternally out of reach 2% target. What should the ECB do next? Precisely nothing.
The recovery from the pandemic has triggered surging inflation across the world but it’s partly a blessed relief for the European Union, which has spent most of the past decade flirting dangerously with deflation. A brief period above its target is the least of Europe’s troubles, seeing as the annual rate was negative at the start of this year. There was little reaction from policy makers then and the same approach is appropriate now.