The unexpectedly rapid retreat in energy prices in the past week has further taken pressure off European Central Bank policymakers to lift interest rates next month but the case for a small hike later on remains firm, four sources told Reuters. The ECB lifted interest rates this month to prevent an Iran-war induced oil-price spike from raising price expectations, and policymakers are now debating the urgency of any follow-up move.
The sources, all with direct knowledge of the discussion, said they were surprised by how quickly oil prices have eased and futures for several key durations were now even below the bank's 'milder' scenario.
