Europe and the United States are united by many things and in others we differ notably.
It is curious how the status
is seen differently from both sides of the Atlantic.
current monetary policies.
High inflation affects both blocs.
However, in the Eurozone the European Central Bank (ECB) is considered to have arrived late, but is already acting strongly to get “ahead of the curve”.
This means, for those who think so, that it has regained credibility and is good for the markets and the economy.
In the United States, although it has been far ahead in restrictive actions - interest rate hikes and stimulus withdrawal - the newspapers and social networks are full of critics who affirm that the Federal Reserve was behind the curve for a long time and You are passing a heavy bill.
Hard interpretations that invite reflection on whether what is happening now has to do with an unfortunate reading of the monetary mandates.
The narrative in the United States in the years after the financial crisis was that inflation was "lost."
It turned the guts of the most orthodox economists.
They could not understand how the largest injections of liquidity in history - via the purchase of bonds - had hardly any effect on prices.
For some, what happened is that inflation went (camouflaged) elsewhere: it appeared in the form of an asset bubble, among others of large technology companies, which are now deflating.
More information
The US accelerates the rate hike with a rise of 0.75% to cool down the economy and fight inflation
The unfortunate events for monetary aspirations to control inflation did not end there.
Just when the Fed and ECB began to feel that inflation might rise, they did not want to act suddenly.
They changed their policy to more loosely interpret their 2% inflation benchmark mandate.
The idea was to wait for prices to rise even higher before acting so as not to slow down growth.
Unfortunately, the pandemic came out and then the invasion of Ukraine and not only did they increase somewhat, but they have run amok for reasons, in part, beyond their control.
Some in the US insist that what the markets and the economy need are gradual and moderate rate hikes.
As before the medicines were not taken little by little, now you have to swallow "pills" of interest rates.
This criticism has been very harsh in the United States in recent weeks.
Perhaps for this reason yesterday the Fed once again decided to raise its reference range for interest rates by 0.75%.
Even though it was a significant increase, it banished the rumors of being able to go up to 1%, which were a widespread opinion not too many days ago.
Is the Fed already ahead of the curve or is it already seeing a recession coming soon?
For now, that of setting a medium-term policy (
forward guidance
) has been replaced by a contingent and immediate reading of what is happening at any given moment.
In the coming months, it may be the ECB that takes the lead in making money more expensive if the recession hits the United States earlier.
50% off
Subscribe to continue reading
read without limits
Keep reading
I'm already a subscriber
