Krugman, Paul.
Two questions about inflation:
1. What would the ECB be doing if it were the Fed?
2. Why have some measures of US core inflation ticked up slightly recently?
On the first question, Eurostat offers us a consumer price index sans energy, food, and tobacco, which is more or less US-style core. Here’s what the 12-month change looks like:
The eurozone looks like the United States — there is no good reason to raise rates. To be fair, on the labor side things look a bit different: there are actual labor shortages in some parts of Europe, reflecting both low labor mobility and the extreme asymmetry of the European shock. But raising rates for all of Europe because parts of Germany are doing well is, as I’ve written before, worse than the one-size-fits-all policy euroskeptics warned about; it’s one size fits one. And the case for a somewhat higher inflation target is even stronger for the euro zone than it is for the US.
Πηγή: The New York Times