Following the European Central Bank (ECB) meeting, Darren Clarke, Trader, Lunaro Financial Services Limited, shared his perspective on the policy outlook and what investors should watch in the months ahead
As expected, the European Central Bank voted to leave rates unchanged at 2.25% today, which aligned with our expectations. In the press conference afterwards, ECB President Christine Lagarde outlined, as expected, heightened geopolitical tensions, highlighting the Middle East dispute and the knock-on increase in energy costs. The ECB medium-term target for inflation is 2%, which eased from 3.2% in May to 2.8% in June today. Despite this, it expects inflation to remain above target until at least early next year. Even though rates were held today, markets still expect a rise in September. How much of this though is already priced in? Will we see the expected 25bp rise next time, or are the ECB going to have to be more aggressive if geopolitical tensions remain critical.
