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Energy shock keeps Eurozone inflation risks skewed higher
Nordea says supply chain disruptions and firm level price adjustments are already embedded, leaving the ECB unconvinced inflation will quickly return to target.
FXStreet, citing Nordea’s Jan von Gerich, said Eurozone inflation risks remain skewed to the upside because a persistent energy shock tied to Middle East tensions continues to pressure prices.
Even if energy conditions improve, von Gerich stressed that supply chain disruptions, higher production costs, and firm level price adjustments are already in place, making it less likely that inflation will quickly normalize to the ECB’s target.
The note also argued the ECB is not convinced inflation will return fast enough, in part because geopolitical risks have kept concerns about persistently high global inflation elevated, supporting expectations that rates could stay higher for longer.
FXStreet added that geopolitical tensions have also influenced broader market conditions, with EUR/USD holding gains above 1.1400 as modest dollar weakness offset Middle East uncertainty.
Latest closeEUR/USD 1.143 ▼0.1%