At the beginning of the past year, its price had been exceptionally low. This results in a particularly sharp increase in a twelve-month comparison. Assuming that oil prices do not rise any further, we should therefore be back to lower inflation rates by the end of this year, if not beforehand.
We tightened policy despite these warnings, and we were vindicated – by the IMF’s own admission. We also did not hesitate to raise interest rates in July 2008. Then, our analysis indicated that past oil price increases threatened to create second-round effects on wages and prices.