Consequently, as measured by the HICP, the inflation rate reached 6% in Germany and 5% in the euro area towards the end of last year. Overall, inflation was already unexpectedly dynamic in 2021, and most institutions were routinely surprised to the upside with their inflation projections.
Their role in enhancing the domestic investment and the potential to trigger financial crisis can be seen as the two sides of the same coin. 3. Capital flow management has been perceived to be challenging particularly in the context of Mundell’s “impossible trinity” of fixed exchange rate, independent monetary policy and open capital account.