O euro zone inflation rose to an all-time high, triggering a series of increases lending rateseven if the possibility of painful recession it’s almost certain. Due to rising fuel prices and a devastating drought, consumer prices rose more than originally expected in August and are expected to rise further in the coming period. This will deal an even greater blow to households and businesses that have turned to their savings.

The combination of high prices and sluggish growth, often characterized as stagflation, ECB the ability to make “difficult” choices that will add to the pain of the 340 million eurozone citizens. An expansionary monetary policy will fuel inflation and ultimately undermine confidence in central banks, threatening the foundations they have laid to fight inflation. However, tight monetary policy will further slow growth, reinforcing recessionary scenarios that have been evident since early summer. Ultimately, monetary policy makers will choose to fight inflation, and interest rates are likely to rise in upcoming meetings, raising the cost of borrowing for governments, companies, and households.

Inflation data released yesterday raises the possibility of a significant ECB rate hike of 75 basis points next week, and doves will have to intervene to bring it down to the still high 50 basis points. Inflation in 19 eurozone countries rose to 9.1% in August from 8.9% in the previous month, exceeding initial estimates. “Inflation rates are likely to pick up in September,” Commerzbank economist Christoph Weil said. “Consequently, pressure on the ECB to further sharply raise interest rates is likely to remain high.” Since the rise in food and energy prices was not unexpected, the rise in the cost of services and the 5% inflation of products, with the exception of oil products, certainly worries ECB officials. Avoiding slower growth looks very difficult as economic confidence has fallen more than originally expected, raising concerns about the growth path. “Higher inflation will put pressure on demand, slowing growth and pushing the eurozone into recession this winter,” said Riccardo Marchelli Fabiani of Oxford Economics.