20:25 2 June 2026
ECB to raise interest rates
Inflation in the euro area unexpectedly accelerated in May, increasing pressure on the European Central Bank (ECB) to raise interest rates at its June meeting. Headline HICP inflation rose to 3.2% y/y from 3.0% in April, while core inflation, which excludes food and energy, climbed to 2.5% from 2.2%. Rising energy prices are increasingly feeding into broader price growth, raising concerns about so-called second-round effects, where higher prices lead to wage pressures and further inflation.
Several ECB officials, including board member Isabel Schnabel, have signaled support for a June rate hike. Markets also expect the ECB to revise its inflation forecasts upward, strengthening the case for tighter monetary policy. While a 25-basis-point increase is widely anticipated, policymakers remain cautious about signaling a broader tightening cycle. Unlike the inflation surge of 2022, the current shock is viewed primarily as supply-driven and is occurring in a weaker demand environment. With the ECB’s key rate already at 2%, any June move may be a one-off adjustment rather than the start of a sustained series of hikes.
(pb.pl)
