Wednesday 20, July 2022

Inflation — long and variable lags

The small countries in the EU which have yet to join the Euro are being hammered with inflation. Their central banks are, in some case, hiking rates hugely, but so far it isn’t working. Slovakia is the exception: it has eye-watering inflation which is close to the others, but at least its borrowers are not being crucified too.

It seems to me that a big driver of inflation in these places is the price of Russian gas. Tight money will neither reduce this price or (much) reduce demand for warm homes. Damn!

China mortgages