Current inflation (4,1% this month in the Eurozone) continues to occupy the minds, including within the European Central Bank (ECB). But is higher inflation permanent or temporary? Edin Mujagić, chief economist of OHV Asset Management, gives his vision in the monthly meeting with Foodbusiness.
The ECB met again last Thursday (28 October) to discuss monetary policy. What should have been one of the most boring meetings ever, all important decisions are on the agenda at the end of this year, but in the end it turned out differently. Due to, among other things, the sharp rise in prices for raw materials and in recent weeks also for energy and the major bottlenecks in global logistics, prices for consumers are rising. And these high inflation rates continue to haunt bank president Christine Lagarde. This led to some remarkable statements, says Mujagić.
Although the financial market is anticipating an interest rate hike at the end of next year, Mujagić wonders. He found Lagarde's reaction striking. "She missed a wonderful opportunity to bust these rumors." Still, Mujagić suspects that the first rate hikes in a decade are slowly appearing on the long-term horizon. And if that happens, he fears the consequences.
