ECB's Rehn Sees No Second-Round Inflation Effects Yet as Markets Price 90% September Hike Odds
Updated
Updated · investinglive.com · Aug 19
ECB's Rehn Sees No Second-Round Inflation Effects Yet as Markets Price 90% September Hike Odds
3 articles · Updated · investinglive.com · Aug 19
Summary
Olli Rehn said wage growth in the euro zone remains moderate and shows no clear second-round inflation effects yet, signaling no fresh evidence of a wage-price spiral.
Anchored inflation expectations will be essential to keep that pattern intact, Rehn said, framing expectations management as the key safeguard against broader price pressures.
Markets still expect tighter policy: traders are pricing about a 90% chance of a September ECB rate hike and roughly 58 basis points of increases by June next year.
Even after another hike, the ECB deposit rate would reach only 2.50%, a level seen as just marginally restrictive if the bank later has to confront a more persistent inflation problem.