Why is inflation so high and so different in different euro area countries?

Why is inflation so high and so different in different euro area countries?

Invitation to a lecture by Madis Müller, governor of the Estonian central bank

After a long period of low inflation, and even occasional deflation, the euro area finds itself suffering high inflation. According to Eurostat figures, annual inflation in the euro area as measured by the harmonised index of consumer prices stood at 8.5% in January, more than four times higher than its medium-term target rate, albeit down from its peak in October (10.6%). The majority of euro area countries have not faced such circumstances for decades.

Last year the Governing Council of the ECB embarked on the normalisation of monetary policy in response to the current situation. Alongside other measures, we raised the key interest rates for the first time in eleven years in July of last year, and have now raised them by a total of 3 percentage points at five consecutive monetary policy meetings of the Governing Council. At the same time, we gave guidance that the period of interest rate rises is not yet over. Despite slowing, headline inflation remains high, and the more stable components outside of energy and food prices show no signs of subsiding yet.

While the average figures are high, inflation varies greatly across euro area countries: from Spain and Luxembourg, which recorded rates of 5.8% in January, to the Baltic states, where inflation is around 20%.

Banka Slovenije is hosting Madis Müller, governor of the Estonian central bank, whose lecture will address issues such as (i) why many countries are seeing record inflation after many years of low rates, (ii) why Estonia has one of the highest inflation rates in the euro area and the EU, and what measures it is taking to curb it, and (iii) where the differences in inflation rates between individual euro area countries come from.

His lecture entitled Why is inflation so high and so different in different euro area countries? will be held on Friday, 3 March 2023, between 10 and 11 am.

The event will open with an introductory address by Boštjan Vasle, Governor of Banka Slovenije, who will then be followed by Madis Müller, Governor of Eesti Pank.

The event will be held at Banka Slovenije's premises, with direct video broadcast available. The event is free, and will take place in English, with a Slovene translation available for the in-person attendees only. Online registration is open until 28 February 2023.

You are most welcome to join us!

CV
Madis Müller, guverner Eesti Pank

Madis Müller leads Eesti Pank and is a member of the European Central Bank's Governing Council, the highest decision-making body of the ECB that among other decisions sets monetary policy for the euro area.

Madis Müller became Governor of Eesti Pank in June 2019, previously he was Deputy Governor of Eesti Pank, a portfolio manager for equity investments at International Finance Corporation (IFC), an advisor to the Executive Director of the Nordic-Baltic constituency at the World Bank, and an economic policy adviser to the Prime Minister and the Minister of Finance of the Republic of Estonia.

Mr Müller holds a Master's in Finance degree from George Washington University in the USA and a bachelor's degree in banking and finance from Estonian Business School. He is also a CFA (Chartered Financial Analyst) and FRM (Financial Risk Manager) charterholder.