Recession Is Quite Near As Inflation Peaks In Europe

The economic situation in Europe is much worse than in the United States, with inflation rates soon to reach double digits. It has already set a new record, and the European Central Bank will have to control rates. The only way out now is to raise interest rates. Even if it pushes the economy into recession, the government cannot allow inflation to get out of control.

Gasoline prices in Europe are rising and are expected to increase several times before the end of the year. The CPI also shows that the prices of everyday goods and services are rising rapidly. The most difficult will be the middle-class families, who do not have many options to pay the increasing bills. Businesses are also struggling to make a profit and spending their cash reserves like crazy.

Currently, Europe is developing in a phase of stagnation, where prices are rising and growth is not yet negative, but slow. Now, if the European Central Bank raises interest rates, inflation will certainly be under control, but by turning growth negative, it will push the economy into recession. If Europe imports more stimulus checks or prints more money, inflation could explode, threatening the authorities’ ability to control inflation.

Interest rates and inflation rates are likely to continue to decline. However, it remains to be seen how aggressively the ECB will raise rates and whether it will follow a similar approach to the US. If this is not done, the small increase will have little effect on the inflation rate, and the middle and lower classes will suffer.

There are reports that the European Central Bank will raise interest rates by 75 basis points next week and will not raise interest rates by 50 basis points until the situation is under control. Inflation in countries using the euro is currently above 9% and is expected to increase in September. Therefore, an economic recession in Europe is also likely, because the European Central Bank has no other choice but to raise interest rates.

With inflation peaking in Europe and expected to hit double digits soon, what do you think? Let us know in the comments section below. Also, if you like our content, please share it with your family and friends.