The sharp revisions in inflation forecasts are not rooted in analytical flaws, overly hesitant ECB policies or model failures. Energy price shocks of historic dimensions are the key factor. They have ended the prolonged phase of excessively weak inflation with risks now clearly increasing. In...

Monetary policy currently has only limited room for manoeuvre to fight inflation. Structural supply problems, war and past omissions are having an impact. Inflation is hitting those hardest who cannot pass on the price increase. There is no evidence of a wage-price spiral in Germany at present....