ECB’s Lane: We expect this transition will require us to hike rates further 0 (0)

<ul><li>Rate hike has been well transmitted to money markets</li><li style=““ class=“text-align-justify“>Appropriate monetary policy should take into account that energy shock remains a dominant force</li><li style=““ class=“text-align-justify“>Eurozone inflation drivers are different compared to demand-driven overheating dynamics</li><li style=““ class=“text-align-justify“>Inflation dynamics associated with energy shock component are what we are exposed to</li></ul><p style=““ class=“text-align-justify“>It’s a fair point but so long as energy prices are soaring and supply-side issues are yet to return back to pre-pandemic conditions, there is going to be spillovers to core prices and that will in turn keep inflation more embedded in the economy. But I guess Lane is making a point that monetary policy will eventually reach a point where it will follow the path of energy prices in general – not now though.</p>

This article was written by Justin Low at forexlive.com.

Go to Forexlive