Not easy to be a central banker

The German Producer Price Index fell 1.4% in May, much more than economists had estimated. There are definitely disinflationary forces at work at a time when manufacturing in European economies is slowing. We interpret this an early indication that the interest rate rises over the last months made by the central banks start to bite and that there is now a risk of policy errors by staying to hawkish for too long. Not easy to be a central banker these days.