ECB policymakers see first of several rate hikes in June, sources say

FRANKFURT, April 30 (Reuters) - ‌European Central Bank ​policymakers ​are likely to raise interest rates at least twice, starting at their next meeting in ‌June, unless a favourable resolution to the Iran ⁠conflict quickly drags energy prices to pre-war levels, two sources close ‌to the discussion told Reuters.

The ‌ECB left interest rates unchanged as expected on Thursday but signalled its rising concerns over soaring inflation as ​disruptions to the flow of fuel and other products the Strait of Hormuz pushes up costs for ⁠the energy-importing euro zone.

Sources speaking on condition of anonymity said they expected a ​first rate increase in June if the situation continued as it was, with traffic disrupted ​and spot Brent prices above $100 a ‌barrel.

Citing the ECB's baseline projections, published in March, the sources said at least two ⁠rate hikes should be expected in this scenario.

Some of these prospects were already discussed at Thursday's meeting, when a few policymakers ⁠argued in favour of a rate increase.

One of the sources said ​that Thursday's discussion was mostly about June and there was little disagreement around the table that policy action will be necessary, unless ‌there is a fundamental change in the outlook.

A second source stressed the outlook could ‌still change if a deal between the United States and ⁠Iran brought the conflict ‌to an end ​and caused energy prices to drop.

An ECB spokesperson declined to comment.

(Reporting by Francesco Canepa and Balazs ‌Koranyi)

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