ECB's Lane Signals Caution as Lower Oil Prices Ease July Hike Odds

ECB policymakers now see reduced urgency for a July rate hike after oil prices retreated faster than expected, falling below the bank's milder scenario. The sharp drop has eased immediate inflation pressure following June's 25 bps hike to 2.25%, with markets pricing only a one-in-three chance of another move before September. However, Chief Economist Philip Lane warned that futures curves still signal elevated energy costs for years ahead and stressed it is too early to conclude inflation risks have eased, keeping the Governing Council data-dependent ahead of Wednesday's euro-zone inflation print.