The under-prediction is owed to a variety of factors: (i) the larger-than-expected increase in prices of international crude oil and other commodities; (ii) the less-than-expected decline in food prices, despite a normal monsoon, which in turn reflected structural changes in food consumption and more demand for protein-based food  BIS central bankers’ speeches  3  items; (iii) erroneous signals from the then available IIP data which suggested some moderation in growth and demand pressures in the second half of 2010–11, whereas the revised IIP series, now available, shows no such deceleration in growth and demand; and (iv) larger than usual upward revisions to the past inflation data.
•  An important difference is of course that, contrary to the ECB, the Fed has not announced a quantitative definition of its goal: this may give the ECB some (slight) advantage in anchoring expectations, as some recent studies appear to suggest, 1 and thus perhaps a more favourable shorter-run trade off.