ECB Signals Further Tightening Possible: "Rate Hike in July if Needed"

Bloomberg News reported on June 12 (local time) that an official from the European Central Bank (ECB), which recently raised its policy rate for the first time in two years and nine months, said that the ECB could increase rates again next month.

AFP Yonhap News

Joachim Nagel, President of the Bundesbank and a member of the ECB's Governing Council, stated, "We are keeping all options open and are prepared to act again if necessary," adding, "A data-driven approach—making decisions at each meeting based on the latest information—remains appropriate."

President Nagel, who is known to favor monetary tightening, argued that the recent rate hike was inevitable for the ECB, even if the Middle East conflict de-escalates quickly, as rising energy prices are having a ripple effect on prices in other sectors. The ECB raised its three key policy rates, including the deposit rate, by 0.25 percentage points each the previous day. Since the outbreak of the war involving Iran at the end of February, the ECB is the first major central bank to raise rates.

The market expects the ECB to raise its policy rate by 0.25 percentage points each in both September and December. However, there are still counterarguments that, even after the recent rate hike, its effectiveness in curbing inflation caused by energy supply shortages will be limited.

After the 2008 global financial crisis, the ECB also raised its policy rate in 2011 due to inflation concerns during a period of economic recovery, but this move led the eurozone economy into a downturn.

This content was produced with the assistance of AI translation services.