ECB Officials: In a Favorable Position After June Rate Hike
Alina Collins
ECB Governing Council member Emmanuel Moulin said on July 3 that the bank is in a good place after its 25-basis-point June hike, with falling oil prices easing inflation — but he ruled out a new tightening cycle and left July and September wide open.
What exactly did Moulin say?
Speaking to Bloomberg TV at the Rencontres Economiques conference in Aix-en-Provence, Moulin's core message: "We are in a good place, and the balance of risks is moving in the right direction."
He drew a clear line: the ECB has not entered "a new rate-hike cycle." What happens in July and September is too early to call.
"We do not give forward guidance — we decide when the time comes." This means → the ECB is deliberately keeping its options open, refusing to let markets price in the next move.
What drove the June hike?
The ECB unanimously raised rates by 25 basis points in June, citing the risk that surging oil prices could spill over into the broader economy.
In plain terms = the fear was a chain reaction: oil rises → transport and production costs rise → food, services, and wages follow. Economists call this "second-round effects."
But two developments shifted the picture after the hike: the Iran peace deal landed, and inflation fell back sharply, more than expected.
Where is the internal split?
Policymakers are now in two camps. One worries that energy-cost pressures could still feed through to food, services, and wages — even after oil prices ease. The fire may be out, but the heat lingers.
The other camp argues that the recent drop in oil and inflation is enough to justify a pause.
Moulin leans toward the second view: he said falling oil will soften services inflation and added that "we are not really seeing second-round effects at this point."
What is the market pricing in?
Investors have already been cutting bets on further ECB tightening this year. This means → the market is pricing a pause, not continued hikes.
Bloomberg Economics goes further: it believes peak inflation has passed.
This reflects a bigger signal: the June hike may turn out to be the tail end of this tightening cycle, not the start of a new one — but the ECB itself refuses to say so outright.
Content is for reference only, not financial advice.