ECB May Have Completed Tightening Cycle After June Rate Hike

The European Central Bank (ECB) may have completed its tightening cycle after raising interest rates in June, according to Qatar National Bank (QNB).

The bank's analysis suggests that the ECB's decision to increase the deposit rate by 25 basis points was a response to concerns about energy price shocks translating into inflation. However, QNB notes that these risks have diminished, and recent data indicates that higher energy costs are not broadly permeating the economy.

The bank cites three main reasons for its assessment: first, the inflation risks that triggered the June hike have subsided; second, the Euro Area's growth prospects have softened, which bolsters the argument against additional rate increases; and third, the posture of monetary policymakers suggests a growing inclination toward maintaining current policy rates.

QNB concludes that the ECB is now more focused on evaluating incoming data and trends in inflation and growth, rather than gearing up for another imminent rate increase.