Lates News

Minutes from the June meeting of the European Central Bank show that the bank can no longer ignore the energy shock as it is expected that rising energy prices will push the medium-term inflation rate above its 2% target. The ECB Governing Council unanimously decided last month to raise the key interest rate to 2.25%, becoming the first major central bank to raise rates due to soaring energy prices caused by the Iran war. The minutes stated: "The current situation is clearly no longer one that can be ignored." "The longer energy prices remain high, the more likely it is that broader inflation will be pushed up through indirect and second-round effects. This situation increases the risk of energy shocks becoming entrenched in underlying inflation and medium- to long-term inflation expectations."