ECB Eyes Two 25-bp Hikes to Reach 2.5% Policy Rate by September
ECB expected to deliver at least two 25-basis-point rate hikes this year, lifting policy rate to 2.5% by September. Surging energy prices from the Middle East conflict fuel persistent inflation while threatening Eurozone growth, skewing risks toward earlier or larger tightening moves.
1. Projected Rate Hikes
Projections now include two 25-basis-point increases this year, with meetings in June and September seen as the most likely occasions to raise the deposit rate from its current level to 2.5%.
2. Inflationary Pressures
Surging energy costs tied to the Middle East conflict have driven headline and core inflation higher, forcing the central bank to weigh more aggressive tightening despite signs of weakening growth.
3. Divergent Central Bank Paths
As the ECB moves toward a firmer policy stance, fellow European institutions such as the Bank of England, Swiss National Bank and Riksbank are expected to hold rates or ease policy, widening regional monetary differences.