Fidelity: ECB awaits price development
Conor Parle, Economist at Fidelity International, comments on yesterday's interest rate decision by the ECB:
'The ECB left interest rates unchanged at their meeting today, but against the backdrop of higher commodity prices and the latest increased tensions in the Middle East, this pause is likely to be temporary.
Beyond oil prices, gas prices had been increasing even before the recent heightened tensions. Higher demand to refill low supplies ahead of winter, alongside China increasing imports, are likely supporting further price pressures in the gas market.
These developments are likely to keep price pressures relatively broad-based. Meanwhile, reasonable resilience in the euro area economy means that, once the ECB updates its September forecasts, it will likely be in a comfortable position to increase rates by a further 25 basis points to the upper end of its neutral range, while sending a clear message about its commitment to price stability.'
