European Central Bank Governing Council member Pierre Wunsch has indicated that the rationale for another interest rate increase is not as clear-cut as it once was.
Speaking in an interview during the ECB's annual forum in Sintra, Portugal, Wunsch, who also heads the National Bank of Belgium, noted that the source of shocks which had previously fueled inflation concerns has "more or less" dissipated following an agreement between the US and Iran.
"We may still need to hike one more time—that is certainly what the market is currently pricing in—but the case for it is less compelling than we thought in June," he stated on Tuesday. "If we conclude that one more hike is necessary, I would prefer to move quickly. But that does not necessarily mean in July."
The European Central Bank is currently assessing the impact of the fragile US-Iran ceasefire on eurozone inflation and whether further monetary policy tightening is still required to bring inflation back to its 2% target.
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