That puts the European Central Bank, which announces its rate decision on Thursday, in a tight spot. Unlike in the US, where government stimulus fueled a demand-led surge in consumer prices, inflation in the 19-member euro zone is primarily down to soaring natural gas costs – made worse by the war in Ukraine.
Europe is bracing for a recession that may do little to tame record inflation, testing the mettle of central bankers who’re just days away from raising interest rates after a decade-long hiatus.
Predictions of an impending downturn are building as the continent’s post-pandemic rebound fades and the reality of a winter energy crisis sinks in – even if fears of a full Russian cutoff don’t come to pass.
