Monday, June 30, 2008

EMU Inflation Reach 4%

Today, Eurostat issued a preliminary estimate of Euro area price inflation in June. It rose to a new all time high of 4%, up from the previous all time high of 3.7%. Compare these numbers to the supposed target of 2%.

This will put further pressure on the ECB to raise interest rates in addition to the already signaled hike at the next meeting, especially if as I expect, inflation rise further in July and August. And while M2 money supply growth slowed somewhat in May to 10.1%, from 10.4% in April, it remains at a level which is certainly high enough to fuel more future price inflation.


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