Trumpflation is squeezing the ECB
The argument that with current interest rates inflation will not return to the 2% target is fallacious, because it will actually depend on the war, not on interest rates.
The current inflation is being fueled by factors including the policies of Donald Trump, which have led to a surge in energy costs and a significant increase in the US deficit and debt. The inflation rate in the US reached 3.4% in August, and the 30-year bond yield has risen above 5%. The Federal Reserve, led by Kevin Warsh, has pledged to combat inflation, but it remains to be seen whether it will raise interest rates before the midterm elections on November 3.
In Europe, the European Central Bank will decide on interest rates on September 10, with some, such as Isabel Schnabel, calling for a hike. The inflation rate in Europe was 3.3% in August, but the underlying inflation rate, which excludes volatile elements, remains steady at 2.4%.
Written by urgent.news from El Pais Economia's report — not a translation of it. Machine-written — may contain errors; check the original before relying on it.
