Quite a few parallels are being drawn between the current situation with food and energy prices and that being seen in 2008. Food prices, looking in absolute but general terms (i.e. the Economist index) are now higher than was the case back then. Food price inflation isn’t as high, but is certainly moving up. Guest post by FxPro For policy makers, the risks are similar. Should central banks focus on the inflationary threat, or look to accommodate the push higher in headline inflation, on the basis that more often than not these things come out in the wash? Furthermore, there is the impact on the economy to consider, with higher prices acting in many ways the same as tax on consumption, leaving less money to spend on the other essentials and non-essentials. The ECB chose to put rates up in July 2008 on the basis of inflation moving higher. However, this move was reversed a mere three months later, soon after Lehman’s had gone to the wall. Naturally, we’re not (well, hopefully not) in the same position now in terms of such a high-impact event coming to pass, but there are still considerable underlying risks, most notable the situation in the Middle East and, more specifically, that it causes a further substantial push higher in oil prices. In the early part of last year the ECB pledged to pull back from its plan to supplying markets with unlimited liquidity at its various repos. The sovereign debt crisis soon put a stop to that, with the ECB again to perform an about-turn to ensure confidence was maintained within the banking system. They are keen to try the same again and may start to do so at this week’s meeting. Unfortunately only time will tell, but the risk of another about turn from the ECB, either on liquidity provision, having to scale back its previous hawkishness or even reverse any eventual tightening, is a risk that should be carefully considered. Simon Smith You can also follow FxPro’s news on our website and insights blog or follow us on Facebook and Twitter Disclaimer: This material is considered as a marketing communication and does not contain and should not be construed as containing investment advice or an investment recommendation, or, an offer of or solicitation for any transactions in financial instruments. Past performance does not guarantee or predict future performance. FxPro does not take into account your personal investment objectives or financial situation and makes no representation, and assumes no liability to the accuracy or completeness of the information provided, nor for any loss arising from any investment based on a recommendation, forecast or other information supplied from any employee of FxPro, third party, or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07). FxPro Financial Services, Karyatidon 1, Ypsonas, Limassol 4180 Cyprus. FxPro - Forex Broker FxPro - Forex Broker Forex Broker FxPro is an international Forex Broker. FxPro is an award-winning online broker, offering CFDs on forex, futures, indices, shares, spot metals and energies, serving clients in more than 150 countries worldwide. FxPro offers execution with no-dealing-desk intervention and maintains a client-centric business model that puts customer needs at the forefront of our operations. Our acquisition of leading spot FX aggregator, Quotix, enables us to offer access to a deep pool of liquidity, as well as top-class order-matching and some of the most competitive spreads in the market. FxPro is one of only few brokers offering Negative Balance Protection, ensuring that clients cannot lose more than their overall investment. FxPro UK Limited is authorised and regulated by the Financial Conduct Authority (registration number: 509956). FxPro Financial Services Limited is authorised and regulated by the Cyprus Securities and Exchange Commission (licence number: 078/07) and by the South Africa Financial Services Board (authorisation number 45052). Risk Warning: Trading CFDs involves significant risk of loss. View All Post By FxPro - Forex Broker Opinions share Read Next AUD/USD Mar.03-Aussie Up against US Dollar Tamar Schoppik 12 years Quite a few parallels are being drawn between the current situation with food and energy prices and that being seen in 2008. Food prices, looking in absolute but general terms (i.e. the Economist index) are now higher than was the case back then. Food price inflation isn't as high, but is certainly moving up. Guest post by FxPro For policy makers, the risks are similar. Should central banks focus on the inflationary threat, or look to accommodate the push higher in headline inflation, on the basis that more often than not these things come out in the wash?… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.