ECB Governing Council member Klaas Knot said “I still expect the rise in inflation to be largely temporary, but we have to take other scenarios with structurally higher inflation and higher interest rates into account. Because if we don’t, it could lead to shock price falls in the future.”
“The effect of energy prices on inflation is temporary by nature, as they need to keep rising to keep pushing up inflation”, Knot said. “But inflation is also pushed higher by global supply restraints, which might be less temporary. They could be caused by a readjustment in international trade, as supply chains are spread less across the globe.”
