Key insights
- ECB's Wunsch suggests potential rate hikes as early as April due to the energy crisis stemming from the Middle East conflict. While the ECB can't control energy prices directly, they aim to limit indirect inflationary effects. This hawkish stance from a governing council member introduces uncertainty and could negatively impact US equities if it signals a broader global tightening trend.
Investing.com -- The European Central Bank may need to raise its key interest rate multiple times if the Middle East conflict continues to drive energy prices higher, with a potential move possible later this month, Belgium’s central bank head Pierre Wunsch said Monday.
"The way I feel comfortable putting it is, if this is not done by June, I think we’re going to have to hike, but I don’t want to exclude a hike in April," Wunsch told WSJ’s What’s News podcast.
Wunsch, a member of the ECB’s governing council, said officials cannot control the direct impact of the crisis on energy prices but can limit its effect on other goods and services.
"We need to move at some point to control the indirect effects," he said. "So the focus will be on what’s our view over the medium term, and it’s still an uncertain view."
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