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

by silvertomars

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