Global Market: ECB weighs inflation risks, digital Euro progress at July meeting

The European Central Bank is widely expected to keep its key interest rate unchanged at 2.25% at its upcoming July meeting, marking a pause after June's surprise hike. Renewed Middle East tensions have lifted crude oil and natural gas prices, but they remain well below earlier peaks, while euro zone inflation slowed more sharply than expected in June, supporting a wait-and-watch approach. Both traders and economists see September as the most likely window for another rate increase, while the ECB is also weighing a proposal to double minimum reserve requirements for banks, which could drain around 160-170 billion euros of excess liquidity, and advancing its digital euro project.