ECB rate hikes to fight fossil-fuel inflation may backfire, raising renewable costs

New Economics Foundation research finds that a 10% rise in oil and gas prices adds 0.35 percentage points to inflation, and argues ECB rate hikes aimed at curbing this inflation disproportionately raise the cost of renewable investments, potentially worsening the energy transition. The claim is based on a research institute's analysis, not yet corroborated by central bank or market data.