European Central Bank President Christine Lagarde's recent assessment that inflation was in a 'good place' has been upended by a new energy crisis. Traders are now betting the ECB will hike rates twice in response to surging prices across Europe. The dramatic shift comes just a month after Lagarde's optimistic assessment.

Europe is hurtling toward another energy crisis as geopolitical tensions escalate. The war has reignited inflationary pressures that the ECB had hoped were under control. Market participants have completely reversed their outlook, now pricing in multiple rate hikes to combat the emerging price surge.

This development marks a significant challenge for ECB policy. The central bank faces mounting pressure to act decisively as inflation threatens to spiral out of control. Traders' expectations of aggressive rate hikes signal growing concern about the ECB's ability to manage the economic fallout from the energy crisis.