The European Central Bank (ECB) is set to meet on July 23, with oil prices once again a top concern for policymakers. Despite a brief retreat in energy prices last month, the recent escalation in the Iran war has pushed oil and natural gas prices back up.

Five Key Questions for the ECB

Analysts are watching the ECB’s next move closely, with five key questions on the table. Firstly, will the ECB hold its key rate at 2.25% or raise it in response to the rising oil prices? Secondly, how will the Iran war escalation change the outlook for the ECB? Thirdly, will the ECB hike rates again this year, and if so, when? Fourthly, how would an increase to the ECB’s minimum reserve requirement impact markets? Lastly, is the digital euro finally gaining traction?

According to Morgan Stanley’s chief Europe economist, Jens Eisenschmidt, the ECB is likely to hold its key rate at 2.25% and may discuss a potential hike in September. The ECB’s decision will depend on the outlook for inflation and the impact of the Iran war on the European economy.

The digital euro is also gaining momentum, with the ECB securing key parliamentary backing in June. The aim is to launch a pilot program next year, followed by a full launch in 2029. However, the focus on retail users may limit the digital euro’s ability to reduce dependency on foreign payment networks.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.