ECB and inflation

inflation eurozone

European Inflation: ECB Should Dovish When It Becomes Hawkish

Bruno Cavalier (Oddo-Bh) | In January, inflation in the Eurozone jumped by 1.2 points to 0.9% yoy, largely due to the increase in VAT rates in Germany. Later this year, the ECB’s target inflation rate of 2% is likely to be exceeded. After the compression of some prices in 2020, the base effects are expected to be very strong. The ECB has no reason to react to a bump in inflation, but since Christine Lagarde has accustomed us to a convoluted message to please the “hawks”, we cannot exclude the possibility of the ECB getting muddled up in its communication.