Economist: European Central Bank suspends rate hike with noticeable change in stance.

Edgar Walker, Chief Economist of Metzler Asset Management, stated in a report that the European Central Bank's policy meeting was as expected, with no interest rate hike, but its tone has significantly changed. He pointed out that the ECB sees rising risks of inflation and downside risks to economic growth. "This is a typical stagflation paradox." Walker said the key is that the ECB does not want to fight against oil prices, but rather seeks to prevent energy price shocks from spreading to wages, prices, and inflation expectations. "External price shocks will thus become a monetary policy issue." He noted that an immediate rate hike may not seem necessary, but a rate hike is still "reasonable." Walker's baseline scenario is that the ECB will raise interest rates twice by the end of 2026, each time by 25 basis points.