Remarks by ECB chief economist, Philip Lane
- ECB still has a lot to do to raise inflation
- Does not see environment in euro area for persistent inflation
- A lot of the inflation rise now is the unwinding of downside shocks of last year
He's not entirely wrong in that regard but complacency also breeds contempt, that's always important to remember. When it comes to rising input cost inflation, the simplest explanation may also be the best one (Occam's razor).
As businesses fear further bottlenecks as higher demand eventually will come, they will want to keep new orders filled and that in turn strains supply chains even further.
One can think of it as a feedback cycle which will take time to even out - only when the global economy truly gets back on its footing over time.
