Can Europe contain the energy shock? ‘Big test lies ahead of us,’ says euro-area economist - EU Perspectives

According to Pia Fromlet, the ECB is walking a fine line between inflation and economic growth / Photo: SEB Energy prices are pushing eurozone inflation higher again. But will the shock spread further? Economist Pia Fromlet spoke to EU Perspectives how Europe has held up so far better than expected and what is the ECB waiting for. Inflation is now heading towards 4% year-on-year, roughly twice the European Central Bank’s (ECB) target. But rather than responding with aggressive interest-rate hikes, ECB President Christine Lagarde said last week that the bank would continue with a “measured” approach, watching how the energy shock develops before deciding how far rates need to move.