At least temporarily – due to supply side factors like higher energy prices and supply side bottlenecks. The crucial question is, of course, how transitory these driving factors of inflation are. Or how persistent they might turn out to be – thus leading to durably higher inflation. Of course, our macroeconomic projections are based on a set of assumptions.
They serve as a snapshot in time and are inevitably surrounded by uncertainty. That is precisely why the Eurosystem closely and continuously monitors a broad array of inflation indicators – including those from financial markets. This allows for more real-time monitoring, but also helps to assess whether the models fully capture the inflation momentum and persistency.