Inflation at risk from Covid-19

Key takeaways

• The pandemic has increased downside tail risks in advanced economies (AEs), while it has increased both downside and upside tail risks in emerging market economies (EMEs).
• The collapse in output and oil prices, on balance, increases downside inflation risks.
• Recent exchange rate depreciations increase upside risks to inflation in EMEs.
• Tighter financial conditions raise both downside and upside risks. In AEs, the increase in downside risks is more prominent.

Online appendix