Europe’s cost of living at an all-time high

EU forced to admit price rises are not as benign and temporary as previously thought

The Eurozone saw inflation rise to 5.1% in January, from 5% the month before, despite optimism for a sharp fall to 4.4%, Eurostat data showed Wednesday. The ECB’s 2% inflation target is more than twice as high now.

According to reports, the latest growth is the highest rate of inflation in the 19 countries that have been able to share the euro since records began.

The single currency rose 0.3% to $1.13050 in the meantime, reaching a one week high against the US dollar. This was due to expectations that the ECB would announce a quicker path to policy tightening starting on Thursday.

This week’s meeting of the ECB’s Governing Council will be held. An announcement is expected on Thursday afternoon. The regulator is under increasing pressure to tighten money printing due to the soaring costs of living in Europe.

The ECB will decide whether to continue implementing a loose monetary policy, or if it will run against the signals from the US Federal Reserve (BoE) that they plan to initiate a rapid rate increase cycle in order to tame inflation growth.

Christine Lagarde, President of the ECB, had indicated that a rate increase in 2022 was unlikely. The Eurozone’s interest rates are at an historic low, but markets have priced in two rate hikes by the regulator this year.