European Central Bank to Announce Growth and Inflation Forecasts Amid Iran Conflict

The European Central Bank (ECB) is set to release its latest quarterly growth and inflation forecasts on Thursday. According to Jin10, these projections may not fully account for the impact of the ongoing conflict in Iran on energy prices. More importantly, the ECB is expected to outline scenarios detailing potential economic developments depending on whether the conflict ends swiftly or persists. Economists at Barclays Bank suggest that if Brent crude oil prices stabilize at $100 per barrel, approximately the current level, and natural gas prices remain at 70 euros per megawatt-hour, which is about 15 euros higher than Wednesday's price, the ECB will likely raise interest rates. They noted in a report that both overall and core inflation could rise significantly, potentially exceeding the ECB's target in the medium term. This situation might lead to an increase in policy rates later this year. However, the macroeconomic and monetary outlook will also depend on the fiscal response to the crisis.