.jpg)
1 hour ago
6
Article content
(Bloomberg) — European Central Bank policymakers are likely to raise interest rates at their next meeting in June unless there are positive developments on energy prices and ending the Iran war, according to people familiar with the situation.
THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY
Subscribe 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 ARTICLES
Subscribe 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 ARTICLES
Create 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 account
- Share your thoughts and join the conversation in the comments
- Enjoy additional articles per month
- Get email updates from your favourite authors
Sign In or Create an Account
or
Article content
Should the fighting persist, there’s only a very small chance a hike can be avoided, said the people, asking not to be identified discussing private talks. They stressed, however, that nothing has been decided and the situation can change quickly.
Article content
Article content
Article content
An ECB spokesperson declined to comment.
Article content
By signing up you consent to receive the above newsletter from Postmedia Network Inc.
Article content
President Christine Lagarde signaled earlier that the ECB will consider an increase in borrowing costs in June after debating and rejecting one on Thursday as it held the deposit rate at 2%. Officials will get updated projections at their next meeting, when economists and investors see them opting for a quarter-point hike.
Article content
Lagarde said the next six weeks “will be the right time” to assess the economy “in order to make an informed decision on verified and revisited information.”
Article content
So far, officials haven’t been convinced of the need to tighten monetary policy, with the ramp-up in oil and natural gas costs not yet triggering so-called second-round effects — even as headline inflation has jumped to 3%.
Article content
Economic growth is also at risk. Data published shortly before the ECB’s rate announcement showed first-quarter growth of just 0.1% in the euro zone — feeding stagflation fears, though Lagarde played down that idea.
Article content
What Bloomberg Economics Says…
Article content
“The ECB is facing a stark dilemma, as the energy shock causes inflation to jump and the economy to slump. President Lagarde introduced a more hawkish tone at the press conference by noting that a rate increase was discussed. All in all, while the ECB may hike in June, its outlook seems far more dovish than financial markets and it’s unlikely to tighten aggressively this year.”
Article content
—David Powell and Simona Delle Chiaie. Click here for full REACT
Article content
Markets don’t see officials stopping in June, pricing three moves in total by year-end.
Article content
“Directionally I know where we’re heading but we shall see, there might be massive changes taking place,” Lagarde said. “There’s one element that is going to have a real real impact. And that is the duration of the conflict.”
Article content
—With assistance from Jana Randow and Alexander Weber.
Article content
English (US)