The inflation trap

Editorial The ECB meeting next week faces a dilemma. How to maintain accommodative monetary and financial conditions in a context of rising inflation, where the latest PMI survey in the Eurozone points to a slowdown in activity in Q4, while maintaining the narrative of a temporary inflationary episode, and lastly by acknowledging a form of “technical tapering” with the reduction in the pace of net purchases under the PEPP . We could add the need to keep long-term interest rates low due to the high debt levels of European countries.