ECB’s Lane: Do not see a situation where we would need to revisit plan for July decision

“The European Central Bank (ECB) will not revisit its decision to raise interest rates by 25 basis points at its July 21 meeting,” said ECB Chief Economist Philip Lane on Monday per Reuters.

Additional comments

Negative rates are no longer appropriate for the bloc but the exit will be done in two steps, first by lifting the negative 0.5% deposit rate to minus 0.25% in July and by a possibly larger amount in September.

The U.S. Federal Reserve opted for an exceptionally large 75 basis point hike last week, its biggest move since 1994, putting pressure on other central banks to accelerate rate hikes.

Indirect effect of energy price increases will continue to put upward pressure on core inflation into 2024.

Facing a tension between lifting risk-free rate and protecting transmission mechanism.

There is no preview beyond sept of what will be appropriate pace for tightening.

EUR/USD fades recovery moves

The news failed to get any major attention but EUR/USD paused the week-start recovery around 1.0500 of late.