The European Central Bank (ECB) may not need to lift interest rates as quickly as expected, thanks to a surprisingly rapid retreat in oil prices over the past week. According to four sources with direct knowledge of the discussion, the ECB is now debating the urgency of any follow-up move after lifting interest rates this month to prevent an Iran-war induced oil-price spike from raising price expectations.
September Hike Still Most Likely
A rate hike in September remains the more likely scenario for now, but the sources said June inflation data due on Wednesday still carries greater significance. If the headline figure indeed retreats from 3.2% as financial markets now anticipate, then waiting until September was the better option, one of the sources said. However, a negative surprise would strengthen the case for a quick follow-up hike in July, the source added.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
