ECB Remains Focused on Inflation

The risk of higher food and energy prices is likely to leave Europe's central bankers averse to rate cuts, despite talk of coordination with the Fed

Led by rising prices for food and energy, euro zone inflation is at the highest level since the start of the European Monetary Union. And the central bank is detecting the first signs that inflation expectations are creeping higher as a result, raising the specter of second-round effects. As long as the European Central Bank remains cautiously optimistic on growth, inflation risk will leave central bankers resistant to rate cuts.

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