ECB's Wunsch Keeps 25-Basis-Point July Hike in Play as Services Inflation Hits 3.5%
Updated
Updated · Reuters · Jun 19
ECB's Wunsch Keeps 25-Basis-Point July Hike in Play as Services Inflation Hits 3.5%
3 articles · Updated · Reuters · Jun 19
Summary
Pierre Wunsch said the ECB could raise rates again in July by 25 basis points if incoming data show inflation is spreading beyond energy, even if that move is later reversed.
Services inflation rose to 3.5% in May from 3.0%, and Wunsch said another weak reading there or in wages would justify acting sooner rather than waiting until September.
Oil prices have fallen after a U.S.-Iran interim peace deal, which Wunsch said could ease inflation, support euro zone growth and even create an oil glut next year.
The ECB lifted its deposit rate to 2.25% last week in a unanimous decision, while markets still mostly expect the next quarter-point increase in September or October.
Wunsch also urged clearer conditional guidance instead of relying solely on meeting-by-meeting language, arguing the ECB should signal when more tightening depends on how the conflict and inflation evolve.