Europe's central bank now has its own way to measure geopolitical risk

The European Central Bank now has its own way to measure geopolitical risk, using local European news sources. This new measure shows that geopolitical events have a bigger impact on Europe's economy than previously thought.

For years, European central bankers relied on US-based measures of geopolitical risk, which often missed local impacts. This new tool means they can now see how events like the war in Ukraine directly affect Europe's inflation and economic output. It gives them a clearer picture of what is happening on their own continent.