14.2 C
Tuesday, June 6, 2023
HomeCore EU Inflation Unexpectedly Surges To New Record High

Core EU Inflation Unexpectedly Surges To New Record High


Related stories

WHO Body Calls For ‘Simulation’ To Prep For Next Global Health Crisis

WHO Body Calls For 'Simulation' To Prep For Next Global Health Crisis Authored by Kevin Stocklin via The Epoch Times (emphasis ours), As 194 nations continue to work through drafts of pandemic agreements that would grant more authority to...

Asian Buyers Scramble For Alternative Oil Supplies After Saudi Price Hike

Several buyers in Asia are looking to buy spot oil cargoes from Russia, Africa, Brazil, or the United States after the world’s top crude exporter, Saudi Arabia, unexpectedly raised its official selling prices for its crude going to Asia in July.   At l...

Universal Basic Income To Be Trialed In England

Universal Basic Income To Be Trialed In England Authored by Thomas Brooke via Remix News, The scheme will see participants receive £1,600 a month for two years... Plans have been announced to trial a universal basic income (UBI) in Eng...

‘Gender-Affirming’ Surgery Leaves People Lonelier and Depressed: Study

'Gender-Affirming' Surgery Leaves People Lonelier and Depressed: Study Op-ed authored by Ben Johnson via The Epoch Times (emphasis ours), The head of a facility that carries out so-called “gender-affirming care” has published a study conf...

International Airlines Slam EU For Sustainable Fuel Mandates

The European Union’s behavior is “anti-aviation” because of mandates obliging airlines to use so-called sustainable aviation fuels as a lower-carbon alternative to ht fuel. This is the message that the aviation industry had for the EU at its annual mee...
Core EU Inflation Unexpectedly Surges To New Record High

Following disappointingly hotter than expected prints from Germany, France, and Spain; overall EU inflation slowed by less than expected in February (+8.5% YoY vs +8.3% exp vs +8.6% prior), while the euro-area's core CPI surged to a new record high (+5.6% vs +5.3% exp vs +5.3% prior).

Source: Bloomberg

Italy was the only one of the eurozone's four largest members to record a decline in inflation, a drop that was large enough to offset small rises in other countries.

Bloomberg's Jamie Rush, chief European economist, noted that “alongside a slew of hawkish remarks from policymakers, we now expect the ECB to keep hiking until June, taking the deposit rate to 3.5%. By then, core inflation should be on a firmly downward trajectory, creating space to take stock. The risk is that sticky core inflation means borrowing costs are taken further into restrictive territory over the summer.”

The speed with which food and services prices rose in February suggests inflation may remain above the ECB's target for longer than the bank has anticipated. Recent surveys point to faster economic growth than the ECB's economists had forecast, strengthening the hand of policy makers calling for larger rate rises.

"With ongoing high underlying inflation and food inflation, and no signs of the tight labor market weakening, the ECB is unlikely to end its rate hiking cycle any time soon," said Peter Sidorov, an economist at Deutsche Bank.

The ECB is all but certain to raise borrowing costs by another 50bps at its next meeting in two weeks’ time, but after that the market is pricing in an increasingly higher terminal rate for ECB tightening.

Bundesbank President Joachim Nagel said Wednesday that further “significant” steps may be necessary to get inflation under control.

Interestingly, the market is adjusting to today's hot inflation prints by pricing in more aggressive tightening sooner... but is beginning to price in the inevitable recession that will cause as it lowers 2Y Bund yields...

Is the EU playing out the same path - with a lag - that US did? Hoping for a "ECB Pivot" - will Lagarde fold quicker than Powell?

Tyler Durden Thu, 03/02/2023 - 07:55


- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories


Please enter your comment!
Please enter your name here