Energy prices normalising; digital euro coming (in 2029)

ECB Executive Board member Isabel Schnabel said this week the Bank would need to raise interest rates further, in part because energy prices were still “measurably higher” than before the Iran war. But front-month Brent crude prices and futures prices are very close to their pre-Iran war levels. This is one reason why we think the ECB has probably finished its tightening cycle with just one rate hike. Next week we expect to learn that euro-zone inflation was little changed and the EC Economic Sentiment Indicator remained quite low in June. 

Note: We’ll be discussing key takeaways from our latest Global Economic Outlook in an online Drop-In briefing on Wednesday, 1st July. Register here to join the session.