The chief economist of the European Central Bank Philip Lane has said he does not believe economies are “entering some new inflationary environment”.
He said there is “zero connection between spikes in prices in the reopening of the world economy and inflation trends.”
Professor Philip Lane was speaking at an online event hosted by the Institute of International and European Affairs today and was responding to a question about concerns raised over recent increases in inflation in the US.
He said we were “nowhere near a super bounce back” in the Euro area economy, adding that “when you’re climbing out of a hole, you’re still in a hole”.
Minister for Finance Paschal Donohoe, who was at the same event, said he believed the strength of the recovery in the second half of this year and into next year may be underestimated.
But he added that “a rebound is the first phase of a recovery, not the entirety of a recovery.”
On the question of changes to international corporation tax rules, the Minister said that change is coming and the nature of that change “will be very complex”.
Paschal Donohoe said the estimated €2 billion reduction in Ireland’s corporate tax revenues from the reforms “could change in both directions”.
He also said that Ireland’s corporate tax rules have been significantly reformed in recent budgets.
There was little acknowledgement of this due to their technical complexity but their significance should not be underestimated, he added.