ECB Blog Flags Higher Inflation Risks Than 2022 Shock
Senior economists at the European Central Bank argue that while energy prices are currently lower than in 2022, the global nature of the current shock could amplify price growth. They suggest that households may adjust to higher inflation more quickly, potentially complicating the path to the bank's target.
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Senior economists at the European Central Bank reported on Wednesday that the current inflation shock in the euro zone could prove more severe than the 2022 episode. Euro zone inflation rose to 3.2% last month, exceeding the 2% target after the war in Iran drove energy costs higher. This increase is now transmitting into the broader economy through the services sector, making a small interest rate hike later this month likely.
