Heiner Flassbeck, Friederike Spiecker – The ECB’s dogmatism reaches new dimensions

The price surge triggered by the pandemic in 2021 and the war in Ukraine in 2022, which primarily caused producer prices to soar, was considerably stronger (Figure 2), but the processes are very similar to those from 2007 to 2010. Here too, the pattern of easing in price growth rates from summer 2022 had nothing to do with monetary policy. Price increases fell long before the monetary policy restriction, which began in July 2022, started to take effect. Assuming an impact lag of only four quarters (many studies arrive at much longer lags of six to eight quarters), the annual growth rates of producer prices were already below zero when monetary policy could have started to take effect.



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