European Central Bank Executive: Further Rate Hike Expected

BlockBeats News, June 27th - European Central Bank (ECB) Executive Board Member Isabel Schnabel warned that even if the US-Iran peace agreement reopens the Strait of Hormuz, price pressures may still be stronger than expected. Schnabel said on Saturday that "food, goods, and services inflation face upward risks," and energy price shocks could spill over into broader areas. While she welcomed the recent decline in energy prices due to the prospects of the US-Iran peace agreement, she warned that the ceasefire should not be a reason to relax vigilance. She said: "Uncertainty remains high, but the announced peace agreement has reduced the likelihood of a negative scenario."

Nevertheless, oil prices are expected to remain high as the opening of the Strait of Hormuz is only gradual. Schnabel, seen as the most hawkish member of the Governing Council, reiterated that "the ECB is expected to further raise interest rates to bring inflation back to 2% in the medium term." She stated that consumer inflation expectations have risen. However, there are no signs of wage pressure. (FXStreet)