Kaiyuan Macro: The European Central Bank will keep interest rates unchanged this year.

Andrew Kenningham, of Capital Economics, stated in a report that the European Central Bank is likely to keep interest rates unchanged this year, followed by a rate cut in 2027. With the temporary truce between the US and Iran, energy costs have decreased, and it is expected that this year oil prices will fall to $75 per barrel. Kenningham said that although short-term inflation forecasts have increased, long-term expectations remain consistent with the central bank's 2% target. "We are more confident that any second-round effects on wage inflation will be minimal." Kenningham also added that if the truce is not maintained and energy prices rise again, a rate hike is still possible. "Decision-makers, including the ECB's chief economist Philip Lane, have been emphasizing that they are prepared to further increase interest rates."