Analysts see Sept. 10 meeting as next window for rate increase
The European Central Bank left its benchmark interest rate unchanged at 2.25% on Thursday, pausing a quarter-point increase from its June 11 meeting as volatile energy prices from the US-Iran conflict cloud the inflation outlook, according to the Associated Press.
The June 11 rate increase was aimed at dampening the impact on consumer prices from higher oil prices caused by the war between the United States and Iran and the subsequent interruption of oil shipments through the Strait of Hormuz, the central bank said at the time.
Oil prices fell after the announcement of a ceasefire in the conflict but then rose again when the ceasefire agreement collapsed and fighting resumed, the AP reported. The swings have made it difficult for the ECB to assess the inflation trajectory and determine its next policy move.
Analysts said the bank may simply be taking a pause to gather more information amid the volatile oil price environment, according to the AP. Economists are pointing to the bank’s Sept. 10 meeting as a possibility for another rate increase.