ECB To Announce Interest Rate Decision Amid Iran Conflict, Oil Price Surge
FRANKFURT, March 19 (Bernama-dpa) -- The European Central Bank (ECB) is set to announce its latest decision on interest rates on Wednesday against the backdrop of surging oil prices due to the conflict in West Asia, reported German Press Agency (dpa).
Inflation in the eurozone stood at 1.9 per cent in February, within the ECB's target range, but concerns are growing that prices could rise sharply due to the conflict.
Financial markets expect the Frankfurt-based central bank to adopt a wait-and-see approach, leaving the key deposit rate at two per cent.
The ECB's chief economist, Philip Lane, has warned of the consequences of a prolonged conflict in Iran, which could fuel inflation and dampen economic growth.
Along with the interest rate decision, the ECB is also set to release new forecasts for growth and inflation in the eurozone – a difficult task given the uncertainty of the current situation.
The central bank is determined to avoid reacting too late to a potential new surge in prices.
Following Russia's invasion of Ukraine in 2022, the ECB faced criticism for having underestimated the rise in prices at the time. Inflation in the eurozone soared at times to over 10 per cent.
Some experts expect an interest rate hike this summer, given the situation.
The ECB's governing council remains vigilant, according to the president of Germany's central bank, Joachim Nagel. "Should the inflation picture change substantially, we are well placed to respond," he said.
-- BERNAMA-dpa