Lagarde Warns Energy Shock May Trigger Further ECB Rate Hikes

European Central Bank (ECB) President Christine Lagarde has hinted that the ECB may raise interest rates further to combat inflation, citing the ongoing energy shock as a significant factor. In an interview with La Croix, she acknowledged that crises are no longer isolated events but interconnected and mutually reinforcing phenomena.

Lagarde pointed out that the pandemic had triggered pressures on energy and raw materials, which were exacerbated by the invasion of Ukraine, leading to an inflation surge.

Meanwhile, Westpac NZ senior economist Satish Ranchhod has also predicted that the Reserve Bank of New Zealand (RBNZ) will need to raise its Official Cash Rate (OCR) by more than initially assumed due to ongoing sizable increases in administered prices such as local government rates.