PRECIOUS METALS | ECB Minutes Say Energy Shock Can No Longer Be Ignored as Inflation Risks Rise

The European Central Bank’s minutes from its June meeting said the bank could no longer ignore the energy shock, as rising energy prices were expected to push medium-term inflation above its 2% target. According to Jin10, the ECB Governing Council unanimously decided last month to raise its key interest rate to 2.25%, making it the first major central bank to hike rates due to elevated energy prices linked to the war in Iran. The minutes said the current situation was clearly no longer one in which the shock could be disregarded. They added that the longer energy prices stayed high, the more likely it was that indirect and second-round effects would lift broader inflation, increasing the risk that the energy shock would become embedded in underlying inflation and in medium- to long-term inflation expectations.