European Central Bank (ECB) President Christine Lagarde.

(Bloomberg)

[Financial Channel/Comprehensive Report] European Central Bank (ECB) President Christine Lagarde (Christine Lagarde) said that China's decision to reopen the economy will increase inflation in Europe because they will compete for more energy.

"CNBC" reported that at the World Economic Forum (WEF) held in Davos, Switzerland this week, China's decision to end the zero-clearing policy and gradually relax the epidemic prevention and restart the economy became one of the focuses of discussions from all walks of life.

Some believe that the reopening could ease the inflationary pressures Europe has faced in recent months as supply chains are being restored, while Lagarde pointed out that China is consuming more energy and is expected to add to ongoing inflationary pressures.

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Lagarde said the reopening of China was mainly good for their own country and good for the rest of the world, but many of them would face inflationary pressures.

China's energy consumption this year will definitely be greater than last year's overall level. They will purchase liquefied natural gas (LNG) from various places. Gard added that increased demand would create greater inflationary pressures.

The International Energy Agency (IEA) has also warned that European companies may face higher costs when buying natural gas this year because of increased competition for the product.

Inflation has been one of the biggest challenges facing European citizens over the last year, largely driven by higher energy prices.

The European Central Bank will raise interest rates four times in 2022, bringing the interest rate to 2%.

The ECB also revealed in December that it would raise interest rates further in 2023 to tackle high inflation.

Recent data showed that inflation in the euro zone was 9.2 percent in December, the second consecutive month of decline in price growth in the euro zone.

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