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What should the ECB do? Above all, don't raise rates
The energy markets have been in a panic since the start of the war with Iran. Oil prices have shot up. The Strait of Hormuz, a key point for trade in energy products, is closed, raising fears about global supplies. This brings back bad memories from the Covid crisis, the start of the war in Ukraine, and even, some would say, the stagflation of the 1970s. Central bankers are being put to the test because a high-intensity supply shock tends to reduce growth and drive up inflation. The ECB recently forecast that inflation would undershoot the 2% target in 2026 and 2027. This scenario is now obsolete. But the ECB must not judge 2026 by the yardstick of 2022.
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Oddo BHF
Oddo Securities provides securities brokerage and research services. The company offers equity, economic, and derivatives research and credit analysis services. It focuses on insurance, automotive, building materials, pharmaceuticals, telecommunications, information technology, and agri-food industries.
Bruno Cavalier
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