Renewed Hormuz hostilities drive ECB rates rethink amid ‘extremely volatile’ outlook

Several consecutive days of strikes exchanged between the U.S. and Iran have once again thrown oil prices into the spotlight — and cast uncertainty on the European Central Bank's interest rate decision next week.

Investors on Wednesday were repricing for the ECB's July 22 monetary policy meeting as soaring oil prices have put expectations for a hold in doubt.

“The renewed outbreak of military conflict in the Middle East and the fresh rise in oil prices underscore that the situation remains extremely volatile and the uncertainty is similarly high,” Bundesbank President and ECB rate setter Joachim Nagel told Reuters on Wednesday.

“It remains advisable to react with caution, but to act decisively if necessary,” he said. “Monetary policy will maintain its vigilant stance.”