ECB Should Delay July Rate Hike as Oil Falls Back Near Pre-Conflict Levels, Demarco Says
Updated
Updated · KFGO · Jun 30
ECB Should Delay July Rate Hike as Oil Falls Back Near Pre-Conflict Levels, Demarco Says
2 articles · Updated · KFGO · Jun 30
Summary
A July ECB rate increase looks less urgent, Alexander Demarco said, arguing policymakers can wait for the next projections instead of tightening hastily.
Oil prices have retreated faster than expected, he said, easing price pressures and likely containing inflation expectations and wage demands even with inflation still above 3%.
Demarco said the case for frontloading another hike would require stronger second-round inflation effects, deanchored expectations or rising wage pressure — conditions he said are not visible now.
Markets currently price only a one-in-three chance of a July move, though a hike by October is fully priced in.
The ECB raised rates in June and still sees lingering underlying price pressure, leaving the door open to further tightening if upcoming projections confirm that path.