ECB Sees Rate Hikes in July and September as Faster Inflation Seen

Source: European Central Bank

The decision-making body of the European Central Bank is set to tighten monetary policy further, given the continuous uptick in inflation. EZU is down 1.76%, and VGK is down 0.07% premarket.

• The Governing Council is looking at hiking the key ECB interest rates by 25 basis points during its policy meeting in July.
• Another rate is expected in September, depending on the updated medium-term inflation outlook.
• A larger hike could be pushed should the inflation outlook persist or deteriorate.
• The Governing Council also projects a “gradual but sustained” increases in interest rates after the September meeting.
• Annual inflation is expected to hit 6.8% this year before falling to 3.5% in 2023 and to 2.1% in 2024. These are higher than the projections in March.
• The Governing Council earlier decided to keep the interest rate on the main refinancing operations at 0.00%, marginal lending facility at 0.25%, and deposit facility at -0.50%.