All the reasons why inflation will peak higher in the euro zone than in the United States

Inflation is likely to peak higher in the euro zone than in the United States (9.1% in June 2022) for four reasons: The sharp deterioration in the euro zone’s terms of trade (rise in the relative price of imports), due to the far higher weight of energy imports than in the United States and the depreciation of the euro; The fact that monetary policy has been slower to react to inflation in the euro zone than in the United States; Even greater hiring difficulties in the euro zone than in the United States; Fiscal policy is expansionary and stimulating demand in the euro zone, whereas it is restrictive in the United States.