Inflation is back. After at least three decades of moderate-to-very moderate consumer price changes in advanced economies, inflation has returned to levels that are severely affecting the lives of households and firms, their decisions to consume and to save, to work and to invest. Last year, average inflation for the world economy was almost 9 per cent, more than 7 per cent in advanced countries and almost 10 per cent in emerging and developing economies. During the year it peaked at between 9 and 11 per cent in the United States, the euro area and the United Kingdom, well above the targets of central banks (fig. 1). In this lecture, the author will mainly consider the recent developments of inflation in the euro area and the monetary policy response that has been taking place since the autumn of 2021. […]