The pace of inflation in the Eurozone in October exceeded expectations and reached the highest level since 2008, which once again exceeded market expectations. This may cause investors to question whether price increases are temporary.
According to data released by Eurostat on Friday, consumer prices rose 4.1% in October, compared to an estimated 3.7% increase. An indicator excluding volatile food and energy prices rose to 2.1% on Friday, a level not seen in nearly two decades.
Previously, the European Central Bank maintained its stimulus measures, including the emergency bond purchase program, unchanged, but Governor Lagarde said that the current rise in inflation “will be more lasting than originally expected.” Officials still expect price pressures to ease next year.
Companies are facing chaos in the global supply chain, which has led to soaring parts, raw materials and transportation costs. At the same time, energy prices rose by 23.5% in October, which is greater than the 17.6% increase a month ago.
Financial markets are betting that inflation will force the European Central Bank to raise interest rates in October 2022, although policymakers insist that this is inconsistent with their own guidance on when to raise borrowing costs.
According to a report on Friday, the professional forecasting agency surveyed by the European Central Bank also raised its inflation expectations until the end of 2023, but they expect the inflation rate in 2022 to drop significantly from the current level. Respondents expect prices to rise by 1.9% in 2022 and 1.7% in 2023, which is lower than the European Central Bank’s 2% target level.
Source: Financial World NetworkReturn to Sohu to see more
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