John Müller: Inflation Expectation

John MuellerCONTINUEMadrid Updated:06/02/2022 03:18h
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One of the great doubts of the economy is to determine when the expectations in society begin to change and these can cause inflationary spirals and other havoc. Economic, psychosocial and historical factors influence it. For example, the German culture, deeply averse to inflation since the Weimar experience a century ago, was supposed to make that country especially impatient with a general rise in prices like the one now taking place. This issue is critical especially when the European Central Bank (ECB) has changed its inflation target from "below and close to 2%" to "a medium-term average of 2%", which means reacting with the same coldness when inflation is at 0% and when it is at 4%.

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