Stagflation - no more a quick fix
“Nov. 30 (Bloomberg) — European inflation accelerated in November to the fastest in more than six years, adding pressure on the European Central Bank to raise interest rates even as economic expansion cools.
The inflation rate in the 13-nation euro area rose to 3 percent this month from 2.6 percent in October, the European Union’s statistics office in Luxembourg said today. An index of executive and consumer sentiment fell to a 20-month low of 104.8 from 106 in October, according to a separate report.
A 75 percent surge in oil prices since mid-January and rising food prices are driving inflation further above the ECB’s 2 percent ceiling. At the same time, easing economic growth may restrain ECB policy makers from increasing interest rates to slow the pace of price increases.”
http://www.bloomberg.com/apps/news?pid=20601085&sid=aOU6d_eKknE8&refer=europe
Comment: Central bankers must make up their mind and decide: either extinguish inflation before expectations become manifest and accept a recession or we’ll get both: inflation and recession.
posted by Antony Mueller