Would ECB rate hikes be a mistake?

With interest rate hikes by the ECB looking likely, we are often asked whether this would be a mistake, with unfavourable comparisons made to previous ECB monetary policy decisions. But there are limitations to historical comparisons because the macroeconomic backdrop is different today. Given the upside risks to inflation, we think there is a case for some "insurance" hikes, meaning that tightening monetary policy would not obviously be an error.