ECB policymaker De Marco said the central bank should not rush into further rate
hikes after oil prices fell unexpectedly and sharply. He noted the ECB raised
rates in June and its forecasts assumed further tightening, but the recent drop
in energy costs strengthens the case for pausing by quickly easing inflation
expectations and reducing wage pressures. De Marco said only a second-round
inflation effect, de-anchored inflation expectations, or stronger wage demands
would justify pre-emptive tightening; those conditions are not currently
evident, and with oil back near pre-conflict levels the ECB can wait for the
next forecast round rather than risk unnecessary harm to growth. He added that
even the milder scenario in the latest forecasts still assumes further
tightening, so if incoming data validate that path the ECB may still need to
raise rates.
