Inflation Breaks Records In Europe, & Powell Admits The Obvious

١ ديسمبر ٢٠٢١

From the point of view of macroeconomic statistics, the main news of yesterday was inflation data from the Eurozone, which showed a record rise in prices in the region. 4.9% year on year, this has never happened in the entire history of the euro. This is almost 2.5 times more than the ECB's target, significantly higher than the previous value and experts' expectations.

But recently Christine Lagarde was very clear in her position, so the data did not make the euro much easier.
So, the global and stable nature of inflationary processes with each new publication of data becomes more and more obvious. As a result, yesterday even Powell, who had previously repeated like a mantra that inflation was a temporary phenomenon, announced at a Senate hearing that it was high time to abandon the term “transitory”, since this is not a completely correct description of inflation.

In addition, Powell said that perhaps in December the pace of reduction of the FRS quantitative easing program could be accelerated. This means that the rate hike may start earlier. Equity markets, which had counted on less aggressive rhetoric in the light of the omicron, were under strong downward pressure.

But this is nothing compared to the pressure the Turkish lira is under. Erdogan continues to systematically and systematically put pressure on the national currency. Turkish President Erdogan, live on the state broadcaster TRT on Tuesday night, November 30, pledged to provide "noticeably" lower interest rates ahead of the general election, which is currently slated for 2023. In general, there is no hope.

Downward pressure was also observed on the oil market. There were enough reasons: omicron and fears about demand amid statements by the head of Moderna that vaccines may be less effective against the new strain; Biden's confirmation of the advisability of listing the strategic reserve; rather optimistic start of negotiations with Iran. As a result, November for the oil market turned out to be the worst in terms of the scale of the fall since March 2020, when the asset lost about 55%.