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Fresh Record For Euro Inflation

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Eurozone inflation jumped to 4.1% in the year to July, the highest since the measurements began in 1997, according to EU statistics office Eurostat.

Inflation in June in the 15 nation bloc was 4.0%, also well above the European Central Bank's 2.0% target.

Meanwhile, unemployment in the euro zone has unexpectedly risen, a sign that economic growth is slowing.

Balancing the risks of rising prices and a downturn pose a challenge for European Central Bank policymakers.

Eurostat revised its May unemployment number up from 7.2% to 7.3% and said it had remained at that level in June.

Spain, hit hard by a housing slowdown, saw unemployment soar to 10.7% - the highest among euro nations and in the 27-nation European Union.

In Germany, Europe's largest economy, the rate was 7.3%.

Rate peak?

The ECB acted earlier this month to control inflation by increasing its key interest rate for the first time in a year to counter the effects of rising food and fuel costs.

Rates rose to 4.25% from 4%.

However, analysts say the central bank may have to hold fire on further rate increases as the European economy slows and companies cut jobs.

Soaring fuel and food prices have limited consumer spending and a strong euro has hurt exports.

"Goodhart's law".

This is the theory named after the economist Charles Goodhart, which states that once an economic indicator is made a target of public policy it becomes increasingly devalued and eventually irrelevant or even counter-productive.

Has the inflation target become irrelevant?

Looks like the ECB has a bit of a problem. I say cut rates now I'm off on holiday in Sept so I could do with the £ strengthening against the Euro so I can buy more beer.

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  • 395 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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