Customers buying bread at the bakery

The mainstream media played the game that inflation eased in Europe, which is total bullshit. In February, inflation’s overall pace across Europe edged down to just 0.1 percent to 8.5 percent from 8.6 percent in January… with prices for services driven higher.

The rate was held higher, in part, because overall inflation rose again in Germany, France, and Spain, the continent’s first-, second-, and fourth-largest economies, respectively. (See “Germany’s Inflation Rate Gains a Full Point in February” in this issue.)

Also, the region’s core consumer price index, which ignores food and fuel costs, rose last month to a record 5.6 percent from 5.3 percent in January.

Strikes and other job actions by workers helped to drive prices higher, The Wall Street Journal said.

The sticky inflation rate means that inflation will ease more slowly through this year than economists had thought, according to the Financial Times.

Christine Lagarde, president of the European Central Bank (ECB), said she “didn’t have much doubt” that the bank would raise its key interest rate again when the governing council meets again next week.

Bank officials have indicated they will raise the rate from 2.5 to 3 percent. 

It might not be the last half-point hike.

“We think ECB hawks will use [the new] data to call for the bank to extend its string of 50-basis-point rate hikes into the second quarter,” economist Melanie Debono at Pantheon Macroeconomics, said in an FT interview.

Bank officials also are concerned that China’s rebound from its COVID lockdowns will push up inflation globally, the WSJ noted. (See “China’s Economy Remains Strong in February” in this issue.)

Futures markets have priced in an expectation that the bank’s key rate will be about 4 percent in November, Tradeweb reported. Markets also are wagering that interest rates will remain higher for longer.

However, Lagarde said inflation will fall “much more” this month because energy prices have reduced. Those lower fuel costs are now working their way through the Eurozone economy.

TREND FORECAST: Like the U.S. Federal Reserve, the ECB waited a year too long to raise rates. Christine Lagarde, the former head of the International Monetary Fund (aka International Mafia Federation) and now the leader of the European Central Bank… bullshitted for two years that inflation was not rising and the ECB could keep interest rates in negative territory and keep buying up corporate and government bonds.

An outright scam, as with the United States and other nations, so these Banksters could give a reason to keep pumping cheap money into equities to artificially prop up economies decimated by politicians that lockdown economies to fight the COVID War.

Back in November 2021, while we had long forecast surging inflation, Lagarde said she didn’t see it coming and it would be “wrong” to raise interest rates now because inflation will begin to cool by the time the new rates would have a chance to impact the economy.

On 3 December 2021, she told the Financial Times that inflation was peaking and that the inflation profile looked “like a hump…and a hump eventually declines.” She said at the time that the ECB is “very unlikely” to alter its interest rate–which has remained negative for seven years–in 2022.

Now, as the central bank is scrambling to catch up with inflation, the Eurozone is sinking deeper into Dragflation, our Top 2022 Trend defined by rising prices and shrinking economic productivity. 

The energy crisis created by the Ukraine war and Western sanctions will prolong not only inflation, but also the continent’s recession, realizing the ECB’s fears that inflation will become embedded across the economy.

Again the reality is simple: The higher interest rates rise, the deeper the EU economy and equity markets will fall.

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