Inflation and Central Banks in America and the European Union ⚔️
Today's inflation figures in France and Spain have surprised many, indicating a critical level of inflation in Europe. Annual inflation in Spain rose to 6.1% and annual inflation in France rose to 6.2%.
This means an increased possibility of further tightening from the European Central Bank (ECB). The terminal rate has increased to around 4% (the current interest rate in Europe is at 3%), meaning the ECB may raise interest rates by 50 basis points to 3.5% 🚨 on March 16 🇪🇺.
However, Germany's inflation figures will be released tomorrow, Wednesday, and the European Union's inflation figures after tomorrow, Thursday, may confirm or refute the current possibilities for the terminal rate.
Today, government bond yields in Germany 🇩🇪, France 🇫🇷, Spain 🇪🇸, and Italy 🇮🇹 are all rising significantly.
In America 🇺🇸, the possibility of the terminal interest rate has increased (since the release of consumer inflation data last Thursday) to a rate higher than 5% 🚨.
Upcoming events:
⬅️ March 10: Unemployment in America
⬅️ March 14: Inflation in America
⬅️ March 22: Interest rate decision
The expected rate increase on March 22 is 25 basis points, but the probability of a 50 basis point increase has risen to 26% today.
Personal opinion: Central banks in Europe and America want to prove that they can reduce inflation and control consumer demand in those countries, and they refuse to acknowledge the following fact: inflation in those countries is under the control of the global oil market.
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