ECB Stays on War Alert Preparing for Next Rate Hike

Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials This advertisement has not loaded yet, but your article continues below.HomePMN BusinessECB Stays on War Alert Preparing for Next Rate HikeThe European Central Bank is likely to hold off on a second interest-rate hike in the coming week while keeping that option open for September.Author of the article:Alexander Weber and Craig Stirling You can save this article by registering for free here. Or sign-in if you have an account.srdkixick[tts6umy(n2slto_media_dl_9.png Statistics South Africa(Bloomberg) — The European Central Bank is likely to hold off on a second interest-rate hike in the coming week while keeping that option open for September.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountAfter raising borrowing costs in June following a spike in energy prices, officials initially expressed confidence that peace negotiations between Washington and Tehran would limit the fallout of the conflict on euro-zone consumer prices. But renewed fighting and uncertainty over vessel traffic through the Strait of Hormuz have put them back to square one, according to Greek central bank Governor Yannis Stournaras. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againData since the June meeting probably won’t push ECB officials into immediate action on Thursday. Oil and gas prices are close to the baseline scenario that policymakers outlined last month, and inflation has slowed more than expected. An ECB bank-lending survey due on Tuesday is unlikely to change the picture significantly. That gives officials time to assess how the situation evolves over the summer. President Christine Lagarde can point to a wealth of data arriving before the September gathering, including two more inflation prints, a reading of second-quarter growth, and several business surveys. The first of those comes Friday, when S&P Global publishes its monthly purchasing managers poll. In June, the composite measure for the currency bloc rose to exactly 50, the threshold separating expansion from contraction. Investors and economists figure that the new information will ultimately convince the ECB Governing Council to deliver more tightening at their Sept. 10 decision. “If we were to see a big disaster in activity data from now until the September meeting, that could increase the incentives for a hold as long as energy prices don’t go crazy,” said Bank of America economist Ruben Segura-Cayuela. “But nothing indicates activity is going severely deteriorate.”What Bloomberg Economics Says:“We expect the ECB to keep borrowing costs unchanged in July before hiking one final time in September. Tighter credit conditions will add to the forces tempering the inflationary impact of the energy shock, such as limited second-round effects, preventing a need for even higher rates.”—Simona Delle Chiaie, chief euro-area economist. For full analysis, click hereElsewhere, PMIs from around the world, a new UK prime minister and chancellor, and inflation numbers from Japan to Britain to Mexico will be among the highlights. A dozen global rate decisions are scheduled, with Indonesia and South Africa expected to hike while Russia and Hungary may cut.Click here for what happened in the past week, and below is our wrap of what’s coming up in the global economy.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.It’s a light week for economic data in the US. Highlights include weekly applications for unemployment benefits on Thursday and new home sales on Friday. Data from S&P Global, also out Friday, will offer insight into both manufacturing and service-sector activity in July. The Federal Reserve, meanwhile, is in the blackout period ahead of its July 28-29 meeting. During that time, policymakers don’t speak publicly about monetary policy.For more, read Bloomberg Economics’ full Week Ahead for the USTurning north, Canadian headline inflation likely cooled in June as gasoline prices fell, while core inflation remains near the central bank’s 2% target. Monday’s report will provide fresh evidence on whether recent energy price increases are feeding through to the broader economy — a key question for policymakers after signaling they would largely look through the initial shock. Retail sales numbers are also scheduled. Asia-Pacific has a busy calendar, including several monetary decisions. Inflation, business activity and trade will also dominate as investors gauge the region’s economic resilience amid a challenging global backdrop.China’s Loan Prime Rate fixing comes on Monday, a decision keenly awaited after growth slowed last quarter to the weakest in more than three years. No change is expected in the 1-year rate, now at 3%. The decision remains important as a signal of whether authorities in Beijing feel the need for further support after an uneven recovery. Elsewhere, Indonesia and Sri Lanka are due to review rates on Wednesday. Investors will closely watch both decisions after the two central banks unexpectedly raised borrowing costs recently to defend their currencies.Japan’s national consumer price index on Friday is the region’s key inflation release, as markets continue to assess how quickly the Bank of Japan can proceed with policy normalization. Singapore and Hong Kong will also report inflation, while New Zealand’s consumer-price index and South Korea’s producer prices will offer further clues on whether the region’s disinflation trend is continuing or beginning to stall.Activity data will be led by purchasing manager indexes. Japan’s flash PMIs will show whether growth is broadening across manufacturing and services. India’s HSBC PMIs will be closely watched for signs of how the economy is coping with a more challenging external environment, as oil prices climb again while a deficient monsoon and a weaker rupee cloud the outlook. Australia’s PMIs, alongside labor-market data, could shape expectations for the Reserve Bank of Australia’s next meeting. India’s infrastructure output and South Korea’s second-quarter GDP will provide additional gauges of regional growth momentum.Trade and external demand round out the calendar. Japan’s trade figures, Taiwan’s export orders, South Korea’s early-month trade data and Malaysia’s trade releases will indicate whether Asia’s export recovery remains intact. New Zealand’s trade figures and Thailand’s customs data will provide further color on regional demand.For more, read Bloomberg Economics’ full Week Ahead for AsiaEurope, Middle East, AfricaThe UK faces a big week, with Andy Burnham’s accession to prime minister set for Monday. Aside from naming a chancellor, he’s likely to reveal a slate of policies affecting the economy in the days that follow. Data will point to the challenges faced by the new premier. Public-sector finance numbers come on Tuesday along with jobs and wages. Inflation on Wednesday is projected to have slowed to 2.7%. Thursday will bring retail sales and the latest PMI readings.Aside from the ECB decision, a highlight in the euro zone will be Germany’s ZEW survey, a gauge of investor sentiment which may offer reaction to economic reform measures approved this month. In Bulgaria, meanwhile, from Wednesday, lawmakers may discuss a final motion for a budget bill for 2026. It features a deficit of 5.7%, a level not seen for decades and well above the European Union’s 3% limit. Hungary’s central bank is poised to cut rates for a second straight meeting on Tuesday as inflation subsides and the country’s assets continue to be buoyed by the ouster of Viktor Orban and prospects for future euro adoption. Key African central banks from Nigeria to South Africa will deliver monetary decisions. With oil prices climbing again after the resumption on a blockade of the Strait of Hormuz, they’re likely to keep them higher for longer.Nigeria and Ghana’s policymakers are expected to stand pat, leaving their key rates at 26.5% and 14% respectively. South Africa is seen hiking again by 25 basis points, to 7.25%. Its call will weigh on neighboring Eswatini and Lesotho, whose currencies are pegged to the rand.In the Middle East, Turkey’s central bank is expected to keep its rate steady at 37% as policymakers assess the impact of the Iran war on the inflation outlook.And in Russia, policymakers will weigh whether to continue reducing borrowing costs or pause after a spike in inflation triggered by surging fuel prices in the face of ongoing Ukrainian drone strikes on oil refineries. For more, read Bloomberg Economics’ full Week Ahead for EMEAAnalysts are expecting some incremental shifts in Mexico’s mid-July consumer prices after a pronounced bout of disinflation.Data for the second half of June showed that the headline print had decelerated to a five-year low of 3.18%, down from 4.63% in mid-March and within hailing distance of the 3% target, while the core print came in at 3.94%.Latin America’s No. 2 economy is also slated to serve up June unemployment, along with retail sales and GDP-proxy data for May. Joblessness has been running below 3% since August 2024, while April’s sales and economic activity figures beat analysts’ estimates.In Argentina, GDP-proxy readings for May are likely to bounce back after some underwhelming numbers in April as a few sectors — notably agriculture and mining — outperform the overall economy. South America’s second-biggest economy will also publish June trade data after posting a record monthly surplus in May.Colombia on Tuesday will report GDP-proxy figures for May in addition to the trade balance and imports for the month. Higher oil prices are bolstering exports, but robust domestic demand that’s sustaining import growth has analysts expecting yet another trade deficit.Colombia’s economy is expected to slow this year from 2025, and President-elect Abelardo de la Espriella must walk a tightrope if he’s to get the government’s finances in order and deliver on pledges to stoke faster growth.Paraguay’s central bankers may be inclined to keep their rate at 5.5% for a fifth consecutive month. The bank on Thursday marked up its 2026 growth forecast to 4.5% from 4.2% while cutting its inflation forecast to 3.3%.For more, read Bloomberg Economics’ full Week Ahead for Latin America—With assistance from Anup Roy, Mark Evans, Reade Pickert, Robert Jameson, Monique Vanek, Beril Akman and Tony Halpin.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.