18 countries in the EU report official inflation rates above 10%. This week the ECB raised rates to 2.00% to “fight” inflation and yet countries like Italy are saying the ECB is crazy for keeping rates so high

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Italy is addicted to cheap money.

Europe will be facing higher energy inflation + commodities inflation driven by China’s demand.. people think inflation return to normal soon. it’s time to wake up. Stagflation will get a lot worse..

— 🅰🅻🅴🆂🆂🅸🅾 (@AlessioUrban) December 17, 2022

Once core inflation surpasses 4-5%, history shows there is one effective way to slow it down.

Raise nominal rates above core CPI by 50-100 bps.

And keep policy tight for a while.

Will Central Banks do it?
Yes.

Is it going to cause a recession?
Yes.

— Alf (@MacroAlf) December 16, 2022

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