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Kathleen Gallagher: Interest rate divergence between Europe and the US could fuel fresh inflation

With Europe now heavily dependent on imports of US liquefied natural gas, a weaker euro could lead to fresh energy price inflation

Since Russia invaded Ukraine, the EU no longer imports Russian gas; instead, the block has shifted its demand to US liquefied natural gas

Over the last two years, the European Central Bank has been able to hide in the crowd and allow others to lead on interest rate hikes to battle inflation. Christine Lagarde, the ECB president, and her colleagues have been able to look on as the US Federal Reserve and the Bank of England have done the hard yards in raising rates.

The lag in ECB rate hikes compared to the US and Britain meant the ...