ECB signals more rate hikes even as US-Iran truce cools oil
Why it matters: Officials see lasting inflation pressure as energy supply, shipping and inventories recover only gradually.
European Central Bank officials signaled they may keep raising interest rates even if a US-Iran peace framework lowers oil prices. Policymakers said the shock from the Middle East conflict has already hit the euro area and will not fade quickly because damaged production, disrupted shipping through the Strait of Hormuz and inventory rebuilding could keep energy costs elevated. Oil has dropped below $80 a barrel from about $110 at the height of the war, but traders still expect at least one more quarter-point increase this year, which would take the ECB deposit rate to 2.5%. Officials including Christine Lagarde, Joachim Nagel, Peter Kazimir and Gabriel Makhlouf warned that companies and workers could turn higher energy costs into broader inflation.