Inflation dynamics in the euro area and the United States present important similarities but also key differences. In both the euro area and the United States rising inflation since mid-2021 reflects global trends that originated from the post-COVID pandemic recovery and the energy and food shocks, which were amplified by Russia’s invasion of Ukraine. Despite these commonalities, inflation dynamics have distinctive origins in the euro area and in the United States. In the euro area, higher energy prices were the main driver of the inflationary surge. Energy prices continue to affect price developments in the euro area, directly and indirectly. In the United States, in contrast, rising prices are less supply- than demand-driven. Similar to the inflation dynamics, the monetary policy stance in the euro area and the United States present important similarities but also key differences.Both the ECB and the US Fed have reacted strongly to the surge in inflation by raising interest rates and accelerating the normalisation of their large balance sheets. In both economies, inflation expectations appear to be largely anchored.However, the monetary policy stance in the euro area and the United States has translated into distinctive economic trajectories that raise different sets of challenges for the two central banks. Financing conditions have tightened much more markedly in the euro area than in the United States. Furthermore, the ECB monetary policy has so far translated into high heterogeneity in inflation levels across euro area Member States.