Surge in gas prices not yet a major inflation risk

Even if it is sustained, the 30% increase in European natural gas prices over the past week would add only around 0.1%-pts to our euro-zone inflation forecast for the coming year and would not require any change in the ECB’s monetary policy stance. But if risks to LNG exports from the Middle East crystalise, policymakers will err on the side of tighter policy to guard against second round effects.  

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