Whereas strong demand is a key factor driving high inflation in the US, inflation in the Euro Area is mainly due to adverse external supply shocks (in Europe, energy prices are much higher due to the war in Ukraine). Standard monetary policy response to such shocks is to accommodate first-round...

The slight slowdown of consumer price infl ation in Germany in November does not yet constitute the beginning of lower infl ation rates. Even though energy prices are dragging infl ation, producer prices have drastically increased in the past year. Our estimates indicate that infl ation rates...