The European Central Bank sees reduced urgency for a July interest rate hike after a surprisingly quick retreat in energy prices, though a small increase later this year remains the more likely outcome, Reuters reported citing sources. Policymakers were caught off guard by the speed of the oil price decline, with key futures now trading below the ECB’s milder scenario. While a September rate increase is still the base case, Wednesday’s June inflation data will be critical; a drop from May’s 3.2% would support waiting, but a stronger reading could revive the case for a July move. ECB President Christine Lagarde said the bank can once again rely primarily on conventional interest rate policy, as consumer and business inflation expectations continue to ease and second-round effects from the energy shock remain limited.