Partly also because it has been absent for a long time, inflation continues to be the main economic topic in the world, where it is hard not to notice a dose of irony in the whole story. The prodigal son has been persistently summoned for a decade, efforts were made diligently and devotedly for his return, only for everyone to be concerned when he finally decided to appear. People, simply, are never satisfied: either inflation is too low and we tremble on the brink of deflation, or it is too high and everyone fears it. In general, it has returned, but stronger than anticipated, and now the main question is whether it will persist or is it just passing through.
Central banks are uniformly convinced of its transitory nature and do not panic, but many analysts and markets are more inclined to believe in its more permanent character. Since it is always wise to hope for the best while preparing for the worst, it is worth looking at what instruments the HNB has in case of prolonged and undesirably high inflation and how effective they can be in the potential fight against inflation.
Kristijan Kotarski from the Faculty of Political Science believes that the HNB’s maneuvering space is ‘constrained due to the ECB’s monetary policy and the fact that the rise in inflation has roots primarily in supply, i.e., in bottlenecks in global and regional supply chains, the state of the local labor market, and idiosyncratic influences such as weather disasters’.
Read more about the available instruments to the HNB and the possibilities of fighting inflation in the printed and digital edition of Lider.
{embed_digitalno_izdanje}{/embed_digitalno_izdanje}
