This year’s ECB Watchers conference, organised by Volker Wieland at the IMFS in Frankfurt, came at a very opportune moment, just weeks after the surge in energy prices. The key question for the ECB is how much the energy price shock will affect inflation and whether it warrants a policy response. As President Lagarde emphasised, most energy price increases do not lead to broad inflation. The difficulty is that it is not yet clear whether the current shock will prove temporary or persistent. Uncertainty remains exceptionally high. Oil prices could plausibly move $25 per barrel higher or lower over the coming weeks, ... (full story)