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Sam Vadas breaks down the ECB's decision to hold interest rates steady and what it signals for the region's economic outlook. Marley Kayden also covers the latest move in energy markets as oil prices climb above $90 per barrel, highlighting the factors driving the rally.
The European Central Bank kept borrowing costs unchanged, with the deposit rate remaining at 2.25%. This buys the central bank time to wait for data to judge whether price pressures caused by the Iran war require additional fiscal tightening.
The European Central Bank kept borrowing costs on hold on Thursday but left room for more tightening in the coming months as a widening conflict in the Middle East pushed up energy prices again.
The latest flare-up in fighting probably won't force the European Central Bank's hand on Thursday, even as energy costs creep higher.
Analysts at ING said a surprise hike at Thursday's meeting “should not be fully ruled out.”
The ECB hiked its key deposit rate by 25 basis points in June as energy prices spiked. Investors had written off a hike at next week's meeting, but higher oil prices have brought monetary policy back into question.
The European Union plans to introduce a raft of policies and funding schemes to shift more of its economy to run on electricity, instead of oil and gas, a draft European Commission proposal seen by Reuters showed.
Threats of a resumed conflict and potential disruption in the Strait of Hormuz triggered a surge in global crude oil prices, with the benchmark Brent Crude Futures index surging above $79 a barrel, up from around $72 at the start of this week.