There is a substantial difference among “demand inflation” (like in US and maybe in Canada) that can be kept under control through the interest rates and “imported inflation” like in Europe where the increase of interest rate can cause stagnation or even recession.
The elasticity of energy and food in relation to price seems to be very low. We have experienced the so called “stagflation” in the seventies of last century and we are at risk to have it again. This risk could probably be mitigated through a precise (I would say: pharmaceutical) balance of the interest rate in comparison with the development rate, it does not seem to be easy task. The primary goal for 2023 should be to avoid recession, we could hope in a moderate development rate, below 1%, but this will be subject to how international situation will evolve.
The important point, as far as Italy is concerned, will be to follow in the next years with a sound politic of reforms and public works, as defined in the PNRR that is a primary opportunity for our country, albeit some modifications could be needed due to the changed international scenario.


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