ECB Signals Action as Iran War Energy Shock Raises Inflation Risks
European Central Bank officials said the Iran war is raising inflation risks by pushing up energy costs, with Governing Council member Joachim Nagel saying the ECB is highly vigilant and will act as needed to prevent those pressures from spilling over more broadly into prices. Lagarde said fossil-fuel price shocks feed directly into inflation through retail energy prices, higher input costs and then consumer prices, adding that the EU, as a net energy importer, faces a terms-of-trade tax when energy prices spike and that the ECB is well placed to react quickly if needed.
The comments extend this week’s warnings that interest rates may still need to rise. Earlier, officials said the ECB remained data-dependent on a meeting-by-meeting basis and could consider rate increases in the coming months if the outlook does not improve, while Nagel said a hike is likely unless conditions improve markedly.
From the sources (10 posts)
@financialjuiceECB's Kocher: ECB is to consider hikes in the next months if there is no improvement
@firstsquawkECB IN DATA-DEPENDENT, MEETING-BY-MEETING MODE, KOCHER SAYS
@firstsquawkECB TO CONSIDER HIKES IN NEXT MONTHS IF NO IMPROVEMENT: KOCHER
@financialjuiceECB's Nagel: ECB is likely to hike rates unless outlook improves markedly
@firstsquawkECB'S LAGARDE: FOSSIL FUEL PRICE SHOCKS SPILL OVER DIRECTLY INTO INFLATION, WITH AN IMMEDIATE PASS-THROUGH TO RETAIL ENERGY PRICES || RISING ENERGY COSTS PUSH UP INPUT PRICES, WHICH MAY THEN BE PASSED ON TO CONSUMER
@firstsquawkECB'S LAGARDE: EU, AS A NET ENERGY IMPORTER, ALSO FACES A TERMS-OF-TRADE TAX WHEN ENERGY PRICES SPIKE || ECB IS WELL PLACED TO REACT QUICKLY AS AND WHEN NEEDED
@firstsquawkECB IS VERY ALERT TO INFLATION THREATS, SAYS NAGEL.
@firstsquawkECB WILL TAKE NECESSARY ACTIONS TO CONTROL RISING ENERGY PRICES, SAYS NAGEL.
@financialjuiceECB's Nagel: ECB is highly alert to increasing inflation risks. ECB's Nagel: ECB will do whatever necessary to curb energy-price surge.
@businessThe ECB is “highly vigilant” to rising inflation risks due to the Iran war and will act as needed to prevent higher energy costs spilling over into prices more broadly, Governing Council member Joachim Nagel said