Marcel Fratzscher is President of the German Institute for Economic Research and Professor of Macroeconomics at Berlin’s Humboldt University.
(Photo: imago images/Montage Handelsblatt)
At currently more than eight percent, high inflation has not only become a problem in the euro zone. The current price increases may not even be the biggest challenge – they are mainly the result of temporary factors such as Russia’s war against Ukraine, the pandemic and interrupted supply chains.
The far greater and clearly underestimated challenge is another: far-reaching changes in the economy and society could mean that our previous definition of price stability will remain unfulfilled for a long time.
Therefore, the European Central Bank (ECB) and other central banks should now take the necessary precautions to remain able to act in a longer phase of increased inflation rates. After much too high inflation in 2022 and 2023, almost all economic forecasts assume a subsequent normalization at a level that is around two percent in the euro zone, which would correspond to the announced goal of price stability.
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