ECB’s Wunsch: Would need stronger second-round effects to justify further tightening
The remarks from European Central Bank (ECB) policymaker and the head of Belgium's central bank, Pierre Wunsch, released by Econostream during the European trade on Wednesday, have signaled that he is not in favor of further monetary policy tightening.
In the June policy meeting, the ECB hiked its policy rates by 25 basis points (bps), the first one seen since September 2023.
Additional remarks
Any inflation surprise before the July meeting more likely on the downside.
Oil prices could fall below pre-war levels.
Most oil production capacity should be restored within a quarter if conflict is over.
One hike could be enough if shock fades before significant second-round effects.
More than one hike to depend on more persistence and stronger second-round effects.
Market reaction
The Euro (EUR) didn't react immediately to ECB Wunsch's remarks. At press time, EUR/USD trades 0.22% lower to near 1.1395.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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