An ECB official emphasizes energy shock impacts and inflation projections will guide the next rate move in September.
European Central Bank policymaker Žigman stated the September rate decision will depend on incoming data and macroeconomic projections. Uncertainty around inflation remains elevated, with the full effect of the recent energy price shock yet to materialize in economic indicators.
Žigman highlighted the intensity and duration of the energy shock as critical factors for Eurozone inflation. The ECB’s medium-term goal remains stabilizing inflation at 2%, though policymakers are split between a potential rate hike or steady rates, contingent on geopolitical developments and inflation surprises.
Most ECB officials lean toward a rate increase, but a pause is possible if the US-Iran conflict de-escalates and inflation does not accelerate further.