While inflation continues to rage in the US, the eurozone inflation rate hit another high last month, reaching 7.5% in March. Energy and food prices have soared across the economies of the 19 member states, and European Central Bank President Christine Lagarde expects energy prices to “stay high for longer”.
Eurozone inflation continues to rise, ECB expected to raise rates 3 times this year
The 19 countries that share the euro suffer from rising inflation according to March figures showing the rate of inflation rose to 7.5%. Like the US Federal Reserve, the European Central Bank’s (ECB) inflation target is 2%, and price inflation for food, services, energy, and durable goods has risen well above above the target.
Speaking to an audience in Cyprus on Wednesday, ECB President Christine Lagarde discussed the highest cost of living in Europe and emphasized: “three main factors are likely to increase inflation”. During his speech in Cyprus, Lagarde insisted:
Energy prices are expected to stay high for longer. Bottlenecks in global manufacturing are likely to persist in certain sectors, [and] households are increasingly pessimistic and could cut spending.
Reports indicate that the ECB, like the Fed, is pressed against the wall and must face inflationary pressures head-on. Reuters reporter Balazs Koranyi it says “Markets are now pricing in 60 basis points of rate hikes by the end of the year.” In a note to clients on Friday morning, Capital Economics Senior Europe Economist Jack Allen-Reynolds wrote that the firm has “targeted on three 25 basis point rate hikes for this year.”
“With euro zone inflation rising further above the ECB’s forecast, and likely to remain very high for the rest of the year, we believe it won’t be long before the Bank starts to raise interest rates.” the economist said on Friday. Reports further indicate that investors from Spain and Germany are bet at the ECB to stimulate rate hikes this year.
Danish politician Margrethe Vestager tries to persuade EU residents to avoid long hot showers
Much of the blame for rising inflation in the 19 countries also lies with the US, as European bankers and bureaucrats are blaming the Ukraine-Russia war. Deutsche Bank chief investment officer Christian Nolting explained in a note that high inflation may persist. “In developed economies, already high inflation rates may now rise further, given the conflict-induced oil and gas price shock,” Nolting wrote. “The sanctions, as well as the disruption of business operations in Russia, are exacerbating supply chain problems.”
Currently, there are very few reports on the EU Covid-19 Policy Spendingthe negative long-term rates of the ECB and the enormous monetary expansion during the last two years. Before the eurozone inflation data was released, German Economy Minister Robert Habeck he pleaded with the Germans to reduce your energy consumption.
“Currently there is no shortage of supply,” Habeck said. “However, we must increase precautionary measures to be prepared in the event of an escalation by Russia.” Interestingly, the Danish politician and European Commissioner for Competition, Margrethe Vestager, tried to persuade EU residents should stop taking long hot showers. Vestager said:
Every time you turn off the hot water in the shower, say: Take that, Putin!
What do you think about the rise in inflation plaguing the eurozone? Let us know what you think about this topic in the comments section below.
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