In its latest projections, on September 13th 2018, ECB staff foresaw a core inflation increase to 1.5% on average in 2019 and further to 1.8% on average in 2020 (core inflation does not include volatile items like energy and food). Such forecasts, along with the renewed euro-area economic growth and the fall in the unemployment rate, constituted an argument in favour of an important monetary policy normalisation step – namely, the announced termination of net asset purchases by the end of December 2018. The timing of the first interest-rate increase might also be informed by forecasts. How much trust should we have ... (full story)