Another interest-rate hike from the European Central Bank could become a policy mistake, ING global head of macro Carsten Brzeski says in a note. ECB President Christine Lagarde reiterated Monday that the June rate increase was driven by a higher inflation outlook. But with the recent drop in energy prices, chances have increased that forecasts could show inflation below 2% in 2027, Brzeski says. Judging from Lagarde's comments and other ECB officials in recent weeks, that wouldn't stop the ECB from hiking again, he notes. "As long as the core inflation forecasts aren't revised downwards, there appears little in the way to stop the ECB." But a new debate could emerge over looking through what could be a temporary energy-price shock, he says. (edward.frankl@wsj.com)
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Another ECB Rate Hike Could be Policy Mistake as Energy Shock Eases — Market Talk
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Another interest-rate hike from the European Central Bank could become a policy mistake, ING global head of macro Carsten Brzeski says in a note. ECB President Christine Lagarde reiterated Monday that the June rate increase was driven by a higher inflation outlook. But with the recent drop in energ…