The ECB has projected core inflation to rise for many years & it's not happened. No mystery what's going on. Estimates of slack going into these forecasts are too optimistic. This is what the ECB strategy review SHOULD have been on, but it wasn't. #CANOO @adam_tooze @heimbergecon

1:09 PM · Sep 17, 2021

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The insufficient policy response is the elephant in the room here...
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Exactly Robin. A failed model of confidence in their actions and models. The model seem to have a significant bias.
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Mainstream economists predicting inflation...
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GIF
Slightly disagree they're now stuck in the Japan model (as many of us are in danger of). Zero interest rates leads to terrible growth and even more importantly amongst the pop no expectations of growth. There are people retiring in Japan who don't know what an interest rate is...
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It's really always like this. By the way, Where report is there this chart?
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You may find the ECB strategy review occasional paper on low inflation interesting: ecb.europa.eu/pub/pdf/scpops…
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Thanks so much. Ultimate arbiter of whether there is serious reconsideration of slack in the Euro zone is the ECB inflation forecast, where it does not yet look like possibility of bigger output gaps has been reflected. We're getting the same reflation message as before COVID...
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