New framework accurately predicts euro area inflation, shaping economic decisions.
The article analyzes euro area inflation using a framework called the New Keynesian Phillips Curve. This framework, based on inflation expectations from markets and surveys, effectively explains and predicts euro area inflation. It performs similarly to official forecasts from the European Central Bank in both short- and long-term predictions. Overall, the New Keynesian Phillips Curve is a valuable tool for tracking euro area inflation trends, providing real-time information on inflation outlook.