ECB unlikely to change rates in next meeting, escriva says

ECB unlikely to change rates in next meeting, Escriva says

ECB Policy Outlook Amid Geopolitical Tensions

By Jesús Aguado

ECB's Approach to Interest Rates

MADRID, March 6 (Reuters) - The European Central Bank is very unlikely to change rates at its next meeting and will make any decisions on a meeting-by-meeting basis, ECB policymaker Jose Luis Escriva said on Friday.

Impact of the Middle East Conflict

Escriva told regional Catalan TV3 television that the bank would need more time to assess the full impact of the war in the Middle East before making decisions.

"With the information I have, I think it's very unlikely that we will touch rates at the next meeting," Escriva said, adding that "we can already take it for granted that there will be effects" from the war.

Potential Effects on Consumers

But he also said these could be sharply limited if the war were to end soon: "The effects on what matters to consumers – everyday prices – we are talking about tenths of a percent, not much more."

Broader Economic Implications

The U.S.-Israeli war on Iran, which has spread to other countries in the Gulf, is threatening to drive up inflation and hit sluggish euro zone growth by making energy more expensive and disrupting supply chains. [O/R]

"Our inflation target of 2% is a medium-term horizon, transitory movements should not necessarily lead us to make decisions. Instead, we must monitor the situation and assess to what extent this is having more persistent effects over time," Escriva said.

Market Reactions and Future Prospects

Recent ECB Decisions and Market Expectations

The ECB left rates unchanged at its last meeting in February and signalled comfort in the outlook, but the situation has materially shifted this week with war and the surge in energy prices.

Investors now see some chances of an ECB rate hike by December.

Spain-U.S. Trade and Banking Sector Developments

Escriva, who is also the Bank of Spain's governor, said it was too early to assess the impact of any halt in trade between Spain and the U.S. following President Donald Trump's threats to cut commercial ties over Spain's stance on the conflict, since there was no firm decision yet.

He also said he did not see any reason why Santander's planned $12.2 billion acquisition of U.S. lender Webster should be affected, asked about this political rift, as the deal is based "on decisions made by private entities that have to go through regulatory processes, which are highly regulated."

(Reporting by Jesús Aguado; Editing by David Latona and Kevin Liffey)