Comments on Twitter from the ECB's Elderson
Elderson is doing a Q&A on Twitter and had this to say on inflation:
Inflation increased sharply in January and February and is likely to go up further in the coming months. This is mainly due to transitory factors, which we look through. Underlying inflation remains subdued owing to weak demand and economic slack.
That's a consensus view at the ECB and around the world. The bigger question is what remains later in the year as base effects fade.
The euro is at a one-week low, down 46 pips to 1.1883.
More continues to cross but it's in the same vein:
It is true that pandemic-related supply constraints, among other factors, are expected to increase inflation during this year. However, our assessment is that underlying price pressures will remain muted due to weak demand and low wage pressures
He said this regarding the PEPP increase:
The increase is precisely a reflection of the flexibility embedded in the PEPP. We have increased purchases to prevent a tightening of financing conditions, that would risk the return of inflation to pre-pandemic levels
