The best way to start this ECB preview is a review of recent ECB action, which can best be compared to driving under the influence. In fact, the best way to view ECB monetary policy over the past several months is to compare the central bank to a drunk driver. The drunk driving started in December. When one central bank after the other made a hawkish pivot later in 2021, the ECB was the odd man out. The ECB resolutely stuck with its view that inflation – including core inflation – would be below 2.0 percent in 2023. Strong disinflationary forces were still lurking in the background, ready to pounce on what the ECB dubbed to temporary inflation ‘hump.’ Days before the February meeting, the ECB chief economist Philip Lane repeated the view that inflation would prove to be very much transitory in nature.


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