ECB Anticipates Another Rate Hike Due to Iran War Impact

The European Central Bank (ECB) policymakers anticipated that another interest rate hike would be necessary to address the impact of the Iran war, according to the ECB's account of its July meeting.

The ECB held interest rates steady at its July 22-23 meeting after raising them in June for the first time in nearly three years to prevent a war-driven increase in energy prices from becoming embedded in the economy.

Policymakers described their decision to hold rates steady as merely a 'pause' in rate hikes, implying that further tightening was still on the table.

The ECB stated that another rate hike would likely be necessary unless the inflation outlook improved significantly, and that official communication should not yet commit to a September hike in case the inflation outlook improved.