Taps Coogan – November 22nd, 2021

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Based on the most recent figures, German CPI clocked in at 4.1% year-over-year for September, the highest level since December 1993 – barely three years after German reunification.

While German inflation is still below US CPI, which is currently clocking in at 6.2%, both have reached their highest levels since the early 1990s and are rising at this brisk pace relative to last Fall, well after the initial round of Covid lockdowns, supply chain disruptions, and ‘base effects’ had already passed.

Consider that, despite these approximately 30 year highs in inflation, both the ECB and the Fed are still expanding their balance sheets.

Indeed, the odds of the ECB actually raising benchmark rates from their record negative levels is essentially zero, regardless of what happens with inflation.

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