The main tool of the world’s central banks to fight inflation today is the tightening of monetary policy, and in particular, raising the interest rate. The U.S. Federal Reserve, the European Central Bank, the Swiss National Bank and the Bank of England are making varying degrees of effort to curb inflation, CNBC writes.

But according to Deutsche Bank CEO Christian Seving,

“If there is a sudden interruption of Russian gas supplies, the likelihood of a recession coming sooner is much higher. There is no doubt about that.”

The European region’s territorial proximity to the conflict zone in Ukraine and its dependence on energy imports from Russia make it highly vulnerable to the effects of the conflict and a potential halt in Russian gas supplies.

According to Seving, the overall situation is very difficult even without the conflict, so the likelihood of a recession in Germany or in Europe as a whole is already higher in 2023 or the year after than in any of the previous years. One only has to look at inflation and its impact on central bank monetary policy to see this.

In addition to inflation caused by the situation in Ukraine and related sanctions on Russia, supply chain disruption has also led to gridlock due to resurgent post-pandemic demand and the return of quarantine due to COVID-19, especially in China.

“It’s such a complex situation where there are 3-4 driving forces that can seriously affect the economy, and all of them together at the same time have an impact on the economy At the same time, the German bank director is increasingly reluctant to rely on traditional models as the economy faces a “real storm” that could eventually trigger a recession”.

“We need to fight inflation because, at the end of the day, inflation is the biggest poison for the economy.”

– CNBC materials used in preparation