ECB Governors Likely to Pause Interest Rate Hikes at July Meeting if Energy Prices Hold
ECB Policymakers Consider July Rate Pause Amid Stable Energy Prices
FRANKFURT, June 11 (Reuters) - European Central Bank policymakers see keeping interest rates on hold at their next meeting in July as the more likely scenario, if energy prices stayed near their current level, two sources told Reuters.
Recent Interest Rate Increase and Inflation Concerns
The ECB raised interest rates for the first time in nearly three years on Thursday in the hope of curbing inflation before a surge in fuel costs triggered by the Iran war spreads more broadly across the euro zone economy.
Likelihood of a Pause at July Meeting
Two sources at the meeting said a pause at the ECB's following gathering on July 22 was more likely than a hike for now, provided there was no sudden and large swing in energy prices.
Triggers for Potential Rate Hike
One source said it would take a new surge in oil prices -- to more than $100 a barrel for Brent crude -- to trigger a rate rise in July, given that second-round effects on the price of other goods and services were absent so far.
A second source said that another unexpected jump in core inflation could also trigger a move.
Future Rate Hikes Remain Possible
However, both sources noted that ECB projections embedded two more rate hikes, so even if policymakers paused in July, they could still act later, possibly in September, without a material improvement in the inflation profile.
Official Response
An ECB spokesperson declined to comment.
(Reporting by Francesco Canepa and Balazs Koranyi)
