#bojraisesratesto31yearhigh CENTRAL BANKS ARE WALKING INTO A TRAP.
The U.S., Eurozone, Japan, and Australia have all raised
rates
recently as inflation pressure returns.
The Fed and ECB recently hiked 25 bps, while Japan pushed
rates to 1.25%, the highest in 31
years.
And here's why this is dangerous.
A major part of the new inflation pressure isn’t coming from excessive consumer spending. It’s coming from the global energy shock.
The numbers already show how much of this pressure is coming from energy.
Eurozone inflation rose to 3.2% in August, while energy inflation surged to 14.3%, up from 10.3% in July.
In August, US inflation increased to 3.4%, while energy inflation skyrocketed to 16.3%, up from 14.7% in July.
Rate hikes can reduce spending, but they do nothing to increase the energy supply, which is causing the initial inflation.
Instead, rising rates are putting households into more trouble as they're already dealing with high energy costs and now have to deal with higher borrowing costs.
Businesses are facing the same problem.
And the consequences of this are going to be really bad.
Inflation is already skyrocketing, and rate hikes could now result in less economic activity, aka "stagflation."
And once the global economy fully enters the stagflation phase, there's no easy way out.$ONDO $C98 $KERNEL
The U.S., Eurozone, Japan, and Australia have all raised
rates
recently as inflation pressure returns.
The Fed and ECB recently hiked 25 bps, while Japan pushed
rates to 1.25%, the highest in 31
years.
And here's why this is dangerous.
A major part of the new inflation pressure isn’t coming from excessive consumer spending. It’s coming from the global energy shock.
The numbers already show how much of this pressure is coming from energy.
Eurozone inflation rose to 3.2% in August, while energy inflation surged to 14.3%, up from 10.3% in July.
In August, US inflation increased to 3.4%, while energy inflation skyrocketed to 16.3%, up from 14.7% in July.
Rate hikes can reduce spending, but they do nothing to increase the energy supply, which is causing the initial inflation.
Instead, rising rates are putting households into more trouble as they're already dealing with high energy costs and now have to deal with higher borrowing costs.
Businesses are facing the same problem.
And the consequences of this are going to be really bad.
Inflation is already skyrocketing, and rate hikes could now result in less economic activity, aka "stagflation."
And once the global economy fully enters the stagflation phase, there's no easy way out.$ONDO $C98 $KERNEL
