The ECB Needn’t Make Europe’s Energy Shock Worse

Europe will suffer amply from the global energy shock that the Iran war has created. Its central bankers should be careful not to worsen the blow.

Since the US and Israel started bombing Iran, the prices of oil and natural gas — which account for more than half of the European Union’s energy use — have at times surged by more than 60% and 90%, respectively. This pushes up prices more broadly while dampening consumption. In the euro area, year-on-year inflation reached 2.6% in March, up from 1.9% in February. Bloomberg Economics has cut an estimate of first-quarter growth to about zero, from more than 0.5%.