Based on what we know about inflation today, I expect that further increases in the target range will be needed to make monetary policy restrictive, but that will depend on economic data in the coming weeks and months. Between the end of July and the FOMC’s September meeting, we will get two employment and CPI reports with data for July and August.
Nevertheless, like many other countries, Estonia is facing challenges: As we speak, Estonia is experiencing one of the highest inflation rates in the euro area – it is expected to average above 10% in 2022. [49] The economy is projected to grow strongly this year, by over 9%. [50] Yet, high inflation and high economic uncertainty put a strain on the Estonian economy.