ECB June rate hike likely amid energy pressures

Investing.com -- European Central Bank policymakers are likely to raise interest rates at their next meeting in June unless the Iran conflict ends and energy prices fall to pre-war levels, according to reports Thursday from Bloomberg News and Reuters, citing people familiar with the discussions.

Sources told Reuters the ECB may implement at least two rate increases, starting in June, if disruptions to traffic through the Strait of Hormuz continue and spot Brent prices remain above $100 a barrel. The people asked not to be identified discussing private talks.

The ECB left interest rates unchanged Thursday, holding the deposit rate at 2%. President Christine 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.

Some policymakers argued in favor of a rate increase during Thursday’s meeting, according to one source. The discussion focused mostly on June, with little disagreement that policy action will be necessary unless there is a fundamental change in the outlook, the source said.

Officials will receive updated projections at their next meeting in June, when economists and investors expect them to opt for a quarter-point hike. The ECB signaled rising concerns over inflation as disruptions to fuel and other products flowing through the Strait of Hormuz push up costs for the energy-importing euro zone.

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