A senior ECB policy official warned that the ECB must prepare for a protracted war of attrition in the Middle East. This situation may push up inflation in the Eurozone. This statement comes against the backdrop of market expectations that the ECB will raise interest rates next week. In an interview, Rehn talked about energy prices driven up by the conflict and the near blockade of shipping lanes in the Strait of Hormuz. He said, “We must not be complacent in the face of these inflationary pressures. We cannot afford a purchasing power crisis in Europe.” Rehn did not publicly and unequivocally support the September rate hike, but he said the market's pricing for next week's meeting was “understandable”. Regarding subsequent interest rate decisions, he was more cautious, pointing out that due to widespread geopolitical uncertainty, interest rate policies must be “assessed meeting by meeting.” Lane warned, “We must be prepared for the conflict to prolong. The claims of the Trump administration and Iran's Revolutionary Guard Corps are completely at odds, and the Middle East may fall into a war of attrition.” At the same time, he pointed out that the Eurozone's economic growth this year has shown “amazing resilience”. Faced with high energy prices and tight trade, the economy's performance is better than the market's previous concerns.

A senior ECB policy official warned that the ECB must prepare for a protracted war of attrition in the Middle East. This situation may push up inflation in the Eurozone. This statement comes against the backdrop of market expectations that the ECB will raise interest rates next week. In an interview, Rehn talked about energy prices driven up by the conflict and the near blockade of shipping lanes in the Strait of Hormuz. He said, “We must not be complacent in the face of these inflationary pressures. We cannot afford a purchasing power crisis in Europe.” Rehn did not publicly and unequivocally support the September rate hike, but he said the market's pricing for next week's meeting was “understandable”. Regarding subsequent interest rate decisions, he was more cautious, pointing out that due to widespread geopolitical uncertainty, interest rate policies must be “assessed meeting by meeting.” Lane warned, “We must be prepared for the conflict to prolong. The claims of the Trump administration and Iran's Revolutionary Guard Corps are completely at odds, and the Middle East may fall into a war of attrition.” At the same time, he pointed out that the Eurozone's economic growth this year has shown “amazing resilience”. Faced with high energy prices and tight trade, the economy's performance is better than the market's previous concerns.