Caps on electricity bills, fuel rebates, and cheap public transport tickets are just some of the ways European governments are trying to cushion the impact of surging energy prices.
While these policies will lower prices in the short-term, the region’s central bankers worry they risk boosting demand and forcing interest rates to go even higher in the longer term.
Tensions between governments and central banks are flaring up. There is, as Dario Perkins, an economist at research group TS Lombard, put it, “a tug of war between fiscal and monetary policy.”
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