Inflation in the euro area has exceeded the ECB's 2% target every year since 2021. That is surprising. In principle, a sufficiently determined central bank can always bring inflation back to target by raising interest rates. Why, then, has the ECB tolerated inflation above target for so long? Could it be that the costs of returning inflation from around 2½% to 2% have become higher than in the past? One possible answer emerges from a recent speech by Isabel Schnabel entitled The Quiet Erosion of Central Bank Independence. She argues that the sharp rise in public debt across advanced economies has increased the ... (full story)