The European Union managed to avoid the most terrible version of the economic crisis by spending huge amounts to protect households and minimizing the consequences of abandoning Russian fuel. But today, the threat of recession hangs over the countries of the region again, writes Bloomberg columnist Lionel Laurent.
At the end of February, the Eurozone recorded a record underlying inflation of 5.6 and the European Central Bank is ready to raise its rates to an unprecedented level of 4%. The regulator fears that without a tightening of monetary policy, a new vicious cycle of wage-induced price increases will appear.
According to the author of the article, the last thing Europe needs today is an economic slowdown caused by the ECB. Precise and sensitive government policy tools would be far more effective than the sledgehammer of aggressive interest rate hikes. Together with inflation, this threatens to disrupt investment and growth.
