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Central banks count differently on the threat of inflation

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Central banks have also expressed strong opposition to rising global inflation, with US and UK officials showing that interest rates should rise sharply in their countries even though the transition is still far from the eurozone.

Philip Lane, chief economist at the European Central Bank, said Monday that the eurozone was “very different” from other countries, adding that there were “strong reasons” for inflation to fall in the region next year. It would be “useless to strengthen the monetary policy right now,” he added.

In contrast, US Federal Reserve deputy chairman Richard Clarida said “conditions necessary” for US interest rates to rise from near zero level would be met by the end of next year as the economy progressed as expected.

The Bank of England has been criticized for leading markets to believe that there has been a rise in prices at their meeting last week, when they dropped prices. unchanged. However, Governor Andrew Bailey insisted that the vote was a “close call” and that the BoE would not “stop” if the economy grows in line with the forecast.

Their comments highlight the differences between central banks on how to tighten monetary policy more rapidly in response to rising global inflation. Consumer demand, barriers to retail companies and rising electricity prices are raising prices around the world.

Investigators say the ECB should be a little lower in price hikes after the last decade trying to prevent the Japanese decline. Eurozone economic activity and job growth remain weaker than in the US and UK.

“In either case, the risk of having a fixed paycheck appears to be much lower in the euro area than in the US or UK,” said Frederik Ducrozet, an expert at Pictet Wealth Management.

The U.S. economy has risen faster than before the epidemic, fueled by its strong economic response. In contrast, a eurozone is expected to achieve the results of pre-epidemic by the end of this year. Although much of the bloc’s unemployment rate has returned to normal, millions of people remain unemployed and have lost their jobs.

Erik Nielsen, an economist at UniCredit, said: “The main difference between the eurozone inflation compared to the US is the economic downturn and the volatility of the US real estate market, while rising inflation in the UK is affected by long-term. be from Brexit and the consequences of inflation. “

Clarida said Monday that if the risk of unemployment in the US drops to 3.8 percent from the current 4.6 percent, as he sees it, this is in line with its main job review – and confirms the monetary policy.

The Fed’s best inflation gauge, which is a major source of income, rose to 3.6 percent in September from a year earlier and is nearing the end of the year by 3.7 percent, according to its latest forecast.

In the UK, consumer prices have risen by about 2 percent of the BoE over the past decade. It also has lower labor markets than the eurozone, and the BoE will focus more on labor market results in the end of the UK plot in October.

“Of course, there have been two job market announcements between here and our next meeting,” in December, Bailey said last week.

In contrast, Lane said the rise in eurozone prices was about 0.9 percent from 2014 to 2019, adding: “Although inflation is much higher, the analysis shows that the eurozone is still experiencing a moderate weakness in the middle years.

The eurozone depreciation reached a new 13-year high of 4.1 percent in October – above 2 percent of the ECB. But Lane said a number of today’s rising prices are expected to disappear next year, including bottle caps and the effects of a temporary rise in taxes in Germany.

He also noted that the large number of eurozone accounts, which are made up of more exports than exports, indicate “the desired intermediate weaknesses” of the bloc.

In addition, despite a lot of government support in dealing with the epidemic, Lane said Europe’s economic policy was “hampered by high debt levels and a lack of centralized economy”.

“These factors strengthen our monetary policy to ensure that inflationary pressures are necessary to ensure that inflation is sustained permanently in order to stabilize inflation by 2 per cent over the medium term,” he said.

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