ECB’s Escriva: Will keep all options on the table and decide on a meeting-by-meeting basis
- If the recent decline in oil prices were to persist, the factors that had concerned policymakers would gradually ease
- The rise in oil prices over recent months had started to be transmitted to other prices in the economy
- Monetary policy would normally look through one-off energy price shocks, but we started to see indirect effects over recent months with rising services inflation, transport costs and food prices.
- We had to react by raising interest rates
- The ECB should remain agile given the uncertainty
- The ECB will keep all options on the table and decide on a meeting-by-meeting basis
- Full report here
ECB's Escriva said the ECB will remain flexible in its monetary policy decisions as uncertainty around energy prices continues. Escriva explained that the recent conflict in the Middle East pushed oil prices higher for longer than expected and those higher energy costs have started to spread through the broader economy, contributing to increases in services inflation, transport costs, and food prices.
These indirect inflationary effects prompted the ECB to raise interest rates by 25 bps at its most recent meeting, as inflation has moved above the 2% target and is not expected to return to target before 2027.
However, he noted that the recent US-Iran agreement has led to a sharp fall in oil prices. If lower oil prices were to persist, the inflationary pressures that concerned policymakers would likely ease. Because the situation can change rapidly, Escriva emphasized that the ECB will continue to evaluate incoming economic data at each meeting and keep all policy options open rather than committing to a fixed path for interest rates.
His remarks are already looking outdated for the markets as the rate hike bets for the ECB started to increase when President Trump said that the MoU with Iran was over for him and oil prices spiked into new highs. Traders are now pricing 40 bps of tightening by year-end (was 25 bps yesterday) and a 40% chance of a rate hike at the upcoming meeting (was 27% yesterday).
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
FX初心者には必須 無料のうちにGET！
