ECB's Dolenc says current rate level gives enough flexibility to respond to energy shock
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Full report here ECB's Dolenc said the European Central Bank’s rate hike gives policymakers enough flexibility to respond to the ongoing Middle East-driven energy shock. He emphasized that given the high uncertainty around how severe and long-lasting the energy shock may be, the
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The ECB is poised for a rate hike in June, driven by external pressures from the Middle East energy crisis, which has shifted the focus from domestic inflation to imported costs. Per the full note [source], analysts now expect two 25 basis point hikes, bringing the policy rate to a neutral range of 1.75% to 2.5%. This marks a significant shift in market sentiment, as the ECB grapples with the dual challenge of managing inflation expectations while safeguarding economic growth. With the geopolitical landscape evolving, the market is closely watching for any signs of further escalation that could impact European energy supplies.
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