Inflation stats from ECB, comments by Mish.

The lead chart is from the ECB Measuring inflation – the Harmonised Index of Consumer Prices (HICP)

Key Chart Points

• The lead chart shows October rates of inflation for all the Eurozone countries. 
• The ECB base interest rate is 1.50 percent and the ECB has penciled in a rise to 2.0 percent on December 15.
• The overall euro area inflation rate rose to 10.6 percent in October from 9.9 percent in September.
• "End of First Half" explained below.

ECB’s Villeroy Wants 50 Basis-Point Hike to Fight Inflation

Francois Villeroy de Galhau, the ECB's Vice Chair and governor of the Bank of France seeks a 50 Basis-Point Hike to Fight Inflation

Using a football analogy, Villeroy said an increase to 2% will mark the end of the first half to reach a normalization of rates in a game that has reached a turning point. He reiterated his expectation that the ECB may shift to a slower pace of rate hikes next year.

The ECB is determined to curb price gains and should get inflation back to its 2% target by 2024 or 2025, Villeroy said.

“This isn’t only a prediction, this is a commitment,” he said.

Second Half Commitment

On July 27, 2022, the ECB hiked rates to 0.00 percent from -0.50 percent set on September 18, 2019.

Talk of hiking interest rates to zero is seemingly ridiculous, but that's what happened. 

The ECB is at 1.50 percent as of November 2. On December 15, the ECB will likely hike to 2.00 percent.

At that point we would be 5 months into a rate hike cycle, with Villeroy determined to "get inflation back to its 2% target by 2024 or 2025"

Halves Explained

• First Half: 5 months
• Second Half: 12 to 24 months

Not to worry, “This isn’t only a prediction, this is a commitment.” 

Inflation Roars Back in the Eurozone With New Highs in Germany, Italy, and France

(Click on image to enlarge)

For more details, please see Inflation Roars Back in the Eurozone With New Highs in Germany, Italy, and France

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