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ECB one more hike in September seen as oil and CPI soften

OCBC says the ECB June minutes supported the latest hike, but softer oil prices and a downside June CPI print increase the risk the move could be one and done.

Reported · Written up by our desk · Central Banks

OCBC strategists Christopher Wong and Sim Moh Siong said the European Central Bank’s June minutes supported its most recent rate hike while still leaving flexibility for future decisions.

They argued the ECB’s next move still hinges on incoming data, and their base case remains for one final rate hike in September, even as they flagged President Lagarde’s comments in Sintra as raising the risk that the June action was “one and done.”

Since the June minutes, the strategists pointed to a sharp fall in oil prices and a June consumer price index reading that came in below expectations.

The FXStreet summary also notes that the ECB backdrop is being weighed alongside broader market signals including uncertainty around the Middle East, which can influence investor risk appetite and currency moves, and rising US Treasury yields that have pressured gold.

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