PARIS\/FRANKFURT: ECB President Christine Lagarde on Monday welcomed news of a US-Iran ceasefire, saying it could help reopen the Strait of Hormuz, although fellow policymaker Joachim Nagel cautioned it would bring no immediate relief to high eurozone inflation.<\/p>\n
US and Iranian officials said overnight they had reached an agreement to end their war and reopen the Strait, a gateway for energy shipment, in a preliminary pact that sent oil prices LCOc1 falling and curbed bets on ECB rate hikes.<\/p>\n
\u201cIf this news is confirmed by developments in the coming days and the signing of a memorandum of understanding … it is good news. We can only welcome it,\u201d Lagarde told France Culture radio.<\/p>\n
The ECB raised interest rates for the first time in nearly three years last week to try to curb inflation before the surge in energy costs that has followed unprecedented supply disruption linked to the Iran war spreads further across the eurozone economy.<\/p>\n
Financial investors, who had largely been betting on two more ECB rate hikes over the next year, pared back their expectations on Monday. They now see just one additional increase, with only a marginal chance of a further move.<\/p>\n
Speaking later in Frankfurt, ECB Governing Council member Joachim Nagel noted financial markets\u2019 reaction to the announced agreement showed investors were anticipating a lasting solution to the Iran conflict. But he remained more cautious about the impact on euro zone inflation, saying there would be no immediate relief even if the Strait of Hormuz reopened soon because it would take months to restore oil supply to its pre-war level.<\/p>\n
\u201cNo relief is in sight for the foreseeable future,\u201d Nagel, who heads Germany\u2019s Bundesbank, said. \u201cOn the contrary: even if the Strait of Hormuz were to become navigable again soon, it will take months for the oil supply to return to normal.\u201d He argued inflation in the eurozone would remain elevated even in the ECB\u2019s \u201cmild\u201d scenario, in which energy prices fall faster.<\/p>\n
In fact, another increase in inflation should be expected when government measures to limit energy price rises expire, Nagel said. These measures, which include a fuel price discount at the pump in Germany, have dampened the inflation rate in the euro zone by 0.4 percentage points in May, he added.<\/p>\n
The German central banker reaffirmed his view that all options – meaning both holding interest rates steady or increasing them – remain for the central bank\u2019s next policy meeting on July 22-23.<\/p>\n
Lagarde too struck a cautious note in her radio interview, saying \u201cthe whole question of uranium enrichment remains to be debated, agreed and concluded in the form of an agreement\u201d. \u2013 Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"PARIS\/FRANKFURT: ECB President Christine Lagarde on Monday welcomed news of a US-Iran ceasefire, saying it could help reopen…\n","protected":false},"author":2,"featured_media":70724,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2480],"tags":[39316,2487,2486,2485,39313,39314,2899,2898,11042,39317,39315],"class_list":["post-70723","post","type-post","status-publish","format-standard","has-post-thumbnail","category-euro-zone","tag-cautions","tag-euro-area","tag-euro-zone","tag-eurozone","tag-hails","tag-iran-deal","tag-kuwait-news","tag-kuwait-times","tag-lagarde","tag-lasting-inflation","tag-nagel"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts\/70723","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/comments?post=70723"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts\/70723\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/media\/70724"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/media?parent=70723"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/categories?post=70723"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/tags?post=70723"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}