Commodities● Neutral
ECB Holds Rate at 2.25% as Oil Swings Cloud Inflation Outlook
The ECB held its benchmark rate at 2.25% as volatile oil prices from the Iran conflict complicate the inflation outlook. Analysts see a possible hike in September.
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The European Central Bank left interest rates unchanged Thursday as volatile energy prices clouded the inflation outlook. The benchmark rate stays at 2.25% after a quarter-point hike at the June 11 meeting. That increase was meant to blunt the impact of higher oil prices from the US-Iran conflict and the disruption of shipments through the Strait of Hormuz.
Some analysts said the hold is a pause to gather more data. Oil prices have whipsawed: they fell after a ceasefire announcement, then jumped when the agreement collapsed and fighting resumed. Brent crude, the international benchmark, rose to $98 a barrel Thursday after Iranian-backed Houthi rebels attacked two Saudi oil tankers near the Bab al-Mandeb Strait. That raised doubts about Saudi Arabia's ability to reroute oil through the Red Sea. Oil had traded around $76 before the ceasefire collapsed, not far from its prewar level of about $73.