ECB Is Set to Pause Rate Hikes to Gauge War Risk

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessECB Is Set to Pause Rate Hikes to Gauge War RiskThe European Central Bank will probably keep interest rates on hold on Thursday, buying time to assess the fallout of renewed fighting in the Middle East.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.j4l(duwfjb{5s5nyc78w}3cz_media_dl_1.png Bloomberg survey of economists c(Bloomberg) — The European Central Bank will probably keep interest rates on hold on Thursday, buying time to assess the fallout of renewed fighting in the Middle East.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountNeither traders nor analysts predict the ECB will deliver a second consecutive hike so soon after last month’s increase. That means the deposit rate is set to remain at 2.25%, a level officials have described as “appropriate” as they weigh the implications of a re-escalation in the US-Iran conflict.A ceasefire following the ECB’s June meeting along with weaker-than-expected inflation that month had raised hopes that the worst of the crisis might have passed. But fresh hostilities, pushing oil back above $90 a barrel, have revived expectations for more tightening ahead.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againFollow the ECB TLIV blog herePolicymakers haven’t yet revealed their preferences for September and beyond, putting the focus firmly on ECB President Christine Lagarde. She faces journalists at 2:45 p.m. in Frankfurt, 30 minutes after the ECB’s rate announcement. While Lagarde is set to defend the ECB’s stance to take decisions based on data, one meeting at a time, she might still offer clues on whether forecasts for a hike in September are reasonable from the current perspective. Repeating an earlier remark when she cited a “general sense” of direction for policy would cement expectations for more tightening next time round, as would a reminder that the ECB’s June forecasts were based on assumptions for a total of three hikes.Traders expect those to be delivered by February at the very latest, with a 60% chance of an additional step by the middle of next year. Economists surveyed by Bloomberg predict policymakers will stop after one more move in September, a decision that will be informed by updated projections and a raft of data including readings on inflation and growth.Recent indicators have been encouraging. Sentiment surveys are hinting at a relatively resilient economy, while inflation slowed more than anticipated in June to 2.8%. Price pressures in services, as well as those excluding energy and food, also eased. Even so, one in 10 economists polled by Bloomberg can point to evidence that inflation expectations are becoming unanchored. Nearly all respondents are at least somewhat concerned about second-round effects. While policymakers are alert to the risk, they haven’t seen any signs so far. Lagarde may be asked for an update, and she is also set to field questions on how the 21-nation euro zone has fared compared with the ECB’s June baseline and its less benign scenarios.Despite the latest increase, oil is close to a milder path that sees inflation easing faster, with gas prices more in line with an adverse outcome. This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Both are set to affect how Lagarde will describe the tilting of risks, after the relative calm of the Iran ceasefire prompted her to say earlier this month they were “more balanced” than when the ECB hiked rates in June.The president’s press conference is also likely to feature questions about her own future.The Frenchwoman keeps stoking speculation that she will leave the ECB before her term expires next October, a step that would give French President Emmanuel Macron a say in appointing a successor ahead of elections next spring.In a recent interview, she admitted that she flirted with the idea of an early exit in February when inflation was near the ECB’s 2% target, before the US started attacking Iran. More recently, she announced plans to involve herself in France’s campaign, in order to elevate European interests “in whichever capacity I will be most efficient,” while saying she won’t be seeking office herself.Meantime, speculation about a position at the World Economic Forum persists. The organization behind the annual Davos gathering continues to operate under interim leadership while searching for a permanent chief.—With assistance from Harumi Ichikura.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.