Europe’s economy grapples with an acute energy shock

best part of a decade, rock-bottom interest rates seemed like a fact of life in the euro zone—as did low inflation. Now consumer prices are rising at an annual rate exceeding 8%, well above the European Central Bank’s target of 2%. Members of the bank’s governing council have signalled their intent to raise rates soon, a message they were expected to reaffirm at a monetary-policy meeting on June 9th, as we went to press. But the finds itself in a tricky position: of contending not only with surging prices, which might warrant rapid rate rises, but also gloomier growth prospects, which might warrant patience. The root cause of both developments is a severe energy-price crunch. Prices of oil and natural gas before Russia’s invasion of Ukraine; the war sent them . have played a much bigger role in pushing up consumer-price inflation in Europe than in America, where stimulus has also been a culprit. Energy prices in the euro area—which rose at a whopping annual rate of 39% in May—are contributing about four percentage points to headline inflation, compared with two in America.