June ECB minutes say the bank can no longer ignore an energy shock, noting
expected energy price rises could push medium-term inflation above its 2%
target. The Governing Council unanimously raised the key rate to 2.25% last
month, the first major central bank to hike in response to energy-price
pressures linked to the Iran war. The minutes warn that the longer energy prices
stay elevated, the greater the chance indirect and second-round effects will
lift broader inflation and entrench the shock in core inflation and medium- to
long-term inflation expectations.
