In Germany, Inflation Just Flew Off The Charts
German inflation accelerated at the fastest pace in decades in March, preliminary figures released on Wednesday showed. In what I think it's fair to describe as a disastrous result, headline consumer prices rose 7.3% YoY this month, more than a full percentage point hotter than expected. The top-end of the range was 7.5%. The harmonized gauge was even worse, printing a 7.6% annual increase, up two percentage points from February's YoY gain. The figure (below) is harrowing indeed. Only one econ
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The confusingly weird thing in this era is the classic disconnected distortion between inflation and central bank rates. I can honestly say I don’t understand this new relationship and clueless as to what it means. Theoretically, rates follow inflation trends, so apparently German rates will have to go full Volker, in hopes that pouring jet fuel on the bonfire will suck the oxygen out of the explosion. It just seems risky playing with fire.
I am not German and have carefully crafted this opinion to be taken with a grain of salt.