Ex-ECB's Trichet Urges `Vigilance' on Spike in Inflation

The video discusses the current inflation trends in the USA and Europe, highlighting the significant spike in inflation in the USA and its global implications. It contrasts this with Europe's situation, where core inflation remains low despite rising oil and commodity prices. The European Central Bank (ECB) views the current inflation as transitory and has introduced a new strategy with a symmetric 2% inflation target. The video also emphasizes the importance of central banks maintaining credibility and their success in averting deflationary risks over the past decade.

Why is maintaining credibility important for central banks in the context of inflation?

In what ways have central banks succeeded in preventing deflationary risks over the last decade?