MHA analyst Joe Nellis said the ECB’s expected further rate increase indicates
inf pressure has become structural and that Europe and the global economy are no
longer facing only short-term inf shocks. He noted euro-area rates remain below
the UK and US but the gap is narrowing, which will squeeze households and firms.
Nellis said the move appears necessary given Aug inf at 3.3% and oil back above
$100/bbl. An orderly resolution of the Middle East conflict would ease some inf,
but some longer-term effects would persist after hostilities end.
