Economics
How Russia-Europe Gas Row Could Embolden ECB Hawks
This article is for subscribers only.
New restrictions on Russian gas supplies, targeting the biggest pipeline to Europe, have sent natural gas prices soaring and markets are now pricing delivery rates to remain close to 120 euros per megawatt-hour until next spring. This would deal a new upside shock to euro-area prices -- Bloomberg Economics estimates that the new pressure, if it persists, could add 0.6-0.7 ppts to inflation over the next few quarters, raising the third-quarter peak to 8.6%. This would increase the probability that the European Central Bank will hike rates by 50 basis points in September.
Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.