Inflation is slowing, but will it come back to ECB’s 2% target?

Now the tables have turned. Central banks are playing bad cop, warning the crisis is far from over while signalling interest rates may need to go higher than markets are forecasting.

Economists have been warning for some time that if inflation expectations become “de-anchored” and workers start demanding higher and higher wages, a wage-price spiral could develop. Getting people to believe inflation is coming down is a significant part of the equation. The high priest of this analysis is Egyptian-American economist Mohamed El-Erian. He believes inflation, even with the impact of higher interest rates, might stall at around the 4 per cent range. “Increasing wage pressure” is driving this change, he said in a recent article.

The latest CPI from the Central Statistics Office here paints a mixed picture. Private rents rose by 10.4 per cent year on year in January and were up on a monthly basis while the cost of “miscellaneous good and services” fell year on year, primarily due to a reduction in prices for childcare services, motor insurance premiums and health insurance premiums.

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Mortgage holders face higher interest rates than previously forecast as ECB focuses on battle against inflationMortgage holders face higher interest rates than previously forecast as ECB focuses on battle against inflation via IrishTimesBiz I hear AIBIreland are writing off peoples loans if they can hurl a bit so all good 👍 IrishTimes Yea but dj is ok . He is special. He don’t have to pay. He is involved with the gaa. They always look after there own don’t they. Sick country. If I was a yng person I’d run a mile from here. Never thought I’d say that . But needs must. Oh yes we do have Bertie back . Run faster.
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