ECB May Implement Mildly Restrictive Policy Amid Rising Energy Prices

The European Central Bank (ECB) may need to implement mildly restrictive monetary policy if energy prices continue to rise, according to Bundesbank President Joachim Nagel.

Nagel stated that the ECB might need to raise rates 'to a level that mildly curbs the economy' in response to a potential prolonged increase in oil and gas prices.

The central bank had increased its key rate from 2.25% to 2.50% on Thursday, which is at the upper end of its estimated neutral range.

Money markets have started pricing in at least another three ECB rate hikes over the next year in response to the latest energy price increases.