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In this paper we briefly review the macroeconomic theory of inflation, relating it to the recent developments in the advanced economies. Then, we analyse the drivers of the rise in inflation observed in 2021 in the United States and in Europe, and we illustrate the factors that may affect the inflationary scenario of the advanced economies in the longer term. Finally, we discuss what challenges the Federal Reserve and the European Central Bank have to meet in the face of current inflationary pressures ...

The European System of Central Banks (ESCB) comprises the ECB and the national central banks of all the EU Member States. The primary objective of the ESCB is to maintain price stability. In order to achieve its primary objective, the Governing Council of the ECB bases its decisions on a two-pillar monetary policy strategy and implements them using both standard and non-standard monetary policy measures. The main instruments of ECB standard monetary policy are open market operations, standing facilities ...