Euro Weekly Digest: The fall in oil price reduces some of the pressure on the ECB

Research evidence excerpt

Euro Weekly Digest: The fall in oil price reduces some of the pressure on the ECB

26 June 2026

Euro Weekly Digest

Meanwhile, downstream, or bank-based, financial conditions have remained fairly

robust, supporting economic activity. The next money and credit data (from which

we derive the credit impulse – a leading indicator of private domestic demand) will

be released on Monday, giving us the latest look at the downstream financial

conditions.

So far, lending flows and the credit impulse have remained fairly resilient. If these

monthly flows continue at the level observed over the last three months, the credit

impulse could improve further. Conversely, if bank lending flows prove marginal,

the credit impulse may drop, although it is likely to remain positive.

Despite the actual lending flows demonstrating resilience, there are warning signs

ahead. The Q1-26 Bank Lending Survey (whose credit conditions are a leading

indicator for the credit impulse) states banks are tightening credit standards amidst

heightened risk, and demand is softening. This could potentially weigh on lending

in the near future. Therefore, it will be crucial to assess whether monthly lending will

slow over the next two months, or if the actual credit conditions reported in the

upcoming Q2-26 Bank Lending Survey (scheduled for June 21st) turn out to be

better than anticipated. One of the factor weighing on financial conditions is

elevated uncertainty. The European Commission sentiment data, including the

uncertainty sub-index (due on Monday) may help us to gauge how quickly

uncertainty is unwinding.

Oil prices have seen some corrections after the US-Iran MOU agreement. Schnabel

mentioned in a recent interview that rate hikes may be needed even if oil prices are