Michael Nicolletos

And that's a demand side inflation.

And it's different when the inflation comes from the supply side, meaning I restrain your supply or I reduce your supply.

Thus the price of the good that you need is less.

Thus the price goes higher.

Now, when that happens, when prices like the price of oil is going up because $10 million a day flow less flow from the Hormuz Strait, so there's less oil in the market as prices go up, this is the equivalent of a tax.

This is equivalent, people feel it as a tax because they pay more for oil, they pay more for energy, they pay more for their electricity.

This is the equivalent of the tax hike.

So you want to raise rates at the same time you're having a tax hike?

I don't think it's a good idea.

So I think a lot of people confuse... No, actually, when they talk about inflation, they talk about inflation in a...

in a generic version, prices are going higher, then we need to raise rates.

No, you need to understand why prices are going higher.

And you need to understand if this is happening from the supply side or from the demand side.

So raising rates at the moment

that when you have inflation because of supply restrictions, I think it's a grave mistake, a grave microeconomic state.

I think the U.S.

will not fall into that trap, although markets are predicting one rate hike until the end of the year, because the U.S.

has a dual mandate, which is price stability and inflation.

While Europe, I think, will make the mistake and will raise rates because it has a single mandate, which is only price stability.

And I don't think they realize the mistake they're going to make.