-- A June interest rate increase may be on the cards for the European Central Bank as it flagged increased upside risks to inflation and downside risks to growth due to the war in the Middle East, according to Deutsche Bank Research.
The ECB on Thursday maintained its three key interest rates, as expected, but noted that a prolonged war would have a greater impact on broader inflation and the euro area economy. The central bank said its Governing Council "remains well positioned" to navigate the current uncertainty, while noting that it is "not pre-committing to a particular rate path."
"Overall, this is a statement that does not pre-commit the ECB to hiking in June. But it does not stop the ECB from hiking in June either," Deutsche Bank's Chief European Economist Mark Wall said in a same-day quick take note.