inflation_GW-01

After several years of inflation rates significantly below the inflation target, the ECB faces consumer price increases not seen since the euro was launched. In April 2022, inflation rates hit an annual rate of 7.4 % in the euro area. Although headline inflation stabilised compared to the previous month, underlying price pressure is broadening. Half of the price increase is due to high energy prices, which are to a large extent explained by the war in Ukraine. In order to tackle inflation concerns, the ECB has prepared the conditions for policy rate increases once asset purchases end. However, at the same time economic conditions are tightening which puts the ECB in a difficult position.