Iran peace deal would not derail case for ECB rate rise, says central banker

{"text":[[{"start":8.75,"text":"A peace deal between the US and Iran before next week’s European Central Bank meeting would not derail the case for raising interest rates, Belgium’s central bank governor said. "}],[{"start":18.45,"text":"“If a peace deal is confirmed just before the meeting, it will be part of the discussion. But we won’t know whether it will last or be credible,” Pierre Wunsch told the FT, signalling that he favours a quarter-point increase."}],[{"start":31.4,"text":"He argued that the discussion among policymakers before they set rates on June 11 “will be quite easy” if the conflict remains unresolved. "}],[{"start":40.05,"text":"If the US and Iran agree a peace deal, the discussion “might be a bit less easy. But there is probably still a case for hiking, it’s just a bit less strong,” he said."}],[{"start":50.349999999999994,"text":"“At some point, we cannot let the market do all the lifting. We need to take a stance,” he said. "}],[{"start":56.949999999999996,"text":"US President Donald Trump said on Monday that peace talks were “continuing, at a rapid pace”. But on the same day, Iranian state-affiliated media said Tehran was suspending back-channel negotiations with Washington due to Israel’s escalating campaigns in Lebanon and Gaza."}],[{"start":73.8,"text":"The ECB is widely expected to be one of the first central banks in the G7 group of western industrialised countries to tighten monetary policy next week. "}],[{"start":null,"text":"

"}],[{"start":83.7,"text":"According to Reuters data, traders in swap markets are pricing in a 98 per cent probability that Europe’s top monetary authority will increase its key deposit rate by a quarter point to 2.25 per cent to contain inflationary pressures."}],[{"start":98.60000000000001,"text":"Oil prices have surged by more than a third since the US and Israel attacked Iran in late February, and shipments of oil and gas through the Strait of Hormuz all but stopped. Data on Tuesday showed that inflation in the 21-country Eurozone rose to 3.2 per cent in May, well above the ECB’s 2 per cent medium-term target."}],[{"start":120.10000000000001,"text":"Wunsch, who has been one of the more hawkish voices among the 27 members of the ECB’s governing council, said that he was “slightly in favour of hiking” at the previous meeting in April."}],[{"start":131.05,"text":"He said that he backed the unanimous decision to hold rates at 2 per cent then as he could “see pros and cons” of an increase.  "}],[{"start":138.3,"text":"He argued against pushing back the response to higher inflation for too long. “My concern is that if we wait to check all the boxes in a meeting-by-meeting approach and set a very high bar for hiking, we may end up acting too late.” This could undermine the ECB’s credibility and lead to higher inflation expectations over time, he warned. "}],[{"start":156.55,"text":"Wunsch pointed to signals that companies that sell to other businesses are already preparing to pass on price increases to their customers after they were caught off guard in the 2022 inflation crisis. “Now they know how to react and, where they can [increase prices], they will.”"}],[{"start":173.20000000000002,"text":"He stressed that a quarter-point increase in June would not necessarily usher in a series of rate hikes. "}],[{"start":179.3,"text":"“I don’t have very strong feelings [about potential interest rate hikes after June],” he said, arguing that the inflationary effects from energy prices were balanced by a weakening economy. “It’s very difficult to have a precise understanding, even directionally, of how long it will push in one direction or the other.”"}],[{"start":206.6,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780471247_8884.mp3"}