David Cobham's picture
Affiliation: 
Heriot Watt University
Credentials: 
Professor of economics

Voting history

Prospects for Euro Area Inflation in 2023

Question 3:  Under its current policy trajectory, with rates peaking at 3.5%, which of the following is most likely?

Answer:
ECB policy rates will be appropriate in 2023.
Confidence level:
Confident

Question 2: Relative to market forecasts of the ECB’s MRO rate peaking at 3.5%, which of the following is more likely during 2023?

Answer:
The MRO rate will peak at 3.5%
Confidence level:
Confident

Question 1: How likely is it that peak headline euro area inflation is behind us?

Answer:
Very likely
Confidence level:
Confident

Euro weakness in 2022

Question 2: Should the ECB respond to movements in the euro-dollar exchange rate of the nature observed in 2022?

Answer:
No
Confidence level:
Confident
Comment:
I'm assuming we are talking here about actual forex intervention. The ECB should of course respond to the inflationary implications of depreciation in its interest rate setting.

Question 1: What was the main cause for the euro’s decline relative to the US dollar in 2022?

Answer:
Monetary policy differences
Confidence level:
Confident
Comment:
I put monetary policy differences first, but the other two are also important. If the Ukraine invasion had not occurred, the safe haven effect would then have been smaller or zero, but interest rate divergences could still have led to some euro depreciation. On the other hand if interest rates had not diverged but Ukraine had been invaded, the depreciation would, in my view, have been much smaller. But really an 'all of the above' answer would be more correct.

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