ECB Official De Maco: With Oil Prices Falling, No Rush to Raise Rates Again
Taylor Wilson
Malta's central bank chief Alexander Demarco told the ECB's Sintra forum that oil prices have dropped back to pre-conflict levels — and the bar for a July rate hike just got higher.
What exactly is Demarco saying?
His key line: "Where price pressures are moderating, the prudent approach is not to rush into policy action."
The ECB already delivered one hike in June, and its own projections assumed further tightening — but oil prices fell sharply in the weeks since, weakening the urgency.
This means → he is not opposing hikes outright; he is opposing acting before the next round of data arrives.
Why does falling oil give the ECB room to wait?
Demarco's logic chain: lower energy costs → lower inflation expectations → weaker wage demands.
Inflation already sits above 3%, well past the ECB's 2% target, and real wage growth remains positive — yet he stresses there are no signs of above-forecast second-round effects or de-anchored expectations.
In plain terms = oil was one of the fires pushing prices up; if the fire goes out on its own, there is less need to pour more cold water (rate hikes) right now.
Has he ruled out further hikes entirely?
No. Demarco was explicit: "Even the more benign scenario in the latest projections incorporates further tightening."
This means → if subsequent data confirm inflation remains stubborn, more hikes are still on the table.
His stance boils down to: wait for the data, don't front-run it — oil is back near pre-conflict levels, so the ECB can afford to see the next forecast round first.
How is the market pricing this?
Markets currently assign roughly a one-in-three probability to a July hike; an October hike is fully priced in.
Demarco's comments align with several other ECB officials who have publicly or privately called for patience.
This reflects a forming consensus between markets and policymakers: July most likely stays on hold; the real decision falls in autumn.
Content is for reference only, not financial advice.