Economist: The European Central Bank Pauses Rate Hikes but Shows a Significant Shift in Tone

```htmlGolden Ten Data reported on April 30 that Edgar Walk, Chief Economist at Metzler Asset Management, stated in a report that the European Central Bank's policy meeting paused interest rate hikes as expected, but its tone has shifted significantly. He noted that the European Central Bank believes both inflationary risks and downside risks to economic growth have intensified. "This is a classic stagflation paradox," Walk said. The key, he explained, is that the European Central Bank does not want to confront oil prices, but aims to prevent energy price shocks from spreading to wages, prices, and inflation expectations. "Exogenous price shocks will thus become a monetary policy issue." He pointed out that immediate rate hikes do not seem necessary, but such moves "remain reasonable." Walk's baseline scenario is that the European Central Bank will raise rates twice by the end of 2026, each time by 25 basis points.```