{"id":63341,"date":"2026-06-08T13:55:14","date_gmt":"2026-06-08T13:55:14","guid":{"rendered":"https:\/\/www.europesays.com\/europe\/63341\/"},"modified":"2026-06-08T13:55:14","modified_gmt":"2026-06-08T13:55:14","slug":"ecb-to-hike-rates-as-mideast-war-pushes-up-inflation-4","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/europe\/63341\/","title":{"rendered":"ECB To Hike Rates As Mideast War Pushes Up Inflation"},"content":{"rendered":"

The\u00a0ECB<\/a>\u00a0has kept borrowing costs on hold for some time as eurozone price rises had been largely under control.<\/p>\n

But the U.S.-Israeli war against Iran and near total closure of the Strait of Hormuz has sharply pushed up global energy costs, feeding into higher inflation.<\/p>\n

Consumer price rises in the 21 countries that use the euro accelerated to 3.2 percent in May, above the ECB’s two-percent target.<\/p>\n

Analysts expect the central bank’s governing council to deliver a quarter percentage point increase to the key deposit\u00a0rate<\/a>, taking it from 2.00 to 2.25 percent, when it meets on June 11.<\/p>\n

“Anything but a rate hike at the ECB meeting would be a big surprise,” said ING economist Carsten Brzeski.<\/p>\n

Other major central banks, including the U.S. Federal Reserve and the Bank of England, have so far kept rates on hold as they assess the fallout from the conflict.\u00a0<\/p>\n

The ECB\u2019s move on June 11 would mark the first time the Frankfurt-based institution has increased rates since September 2023, as it battled a historic surge in inflation unleashed by Russia’s invasion of Ukraine.<\/p>\n

Following that, the central bank delivered a series of cuts as inflation eased, but has held rates steady since June last year.<\/p>\n

But some economists have criticised the expected hike as it could constrict growth further in the sluggish eurozone by making it more costly for households and businesses to borrow.<\/p>\n

This comes with the war already adding to headwinds as the single currency area is heavily dependent on energy imports.<\/p>\n

The European Union last month slashed its growth forecast for the eurozone to 0.9 percent for 2026, down from a previous prediction of 1.2 percent.<\/p>\n

Revised data released on June 5 showed the eurozone economy contracted 0.2 percent in the first quarter.<\/p>\n

Chief economist at Allianz, Ludovic Subran, told AFP that raising borrowing costs would be a bid to “provide reassurance” that the ECB was keeping an eye on higher inflation.<\/p>\n

But he added: “This hike is not necessary; the ECB could wait, especially since the slowdown in growth is clear.”\u00a0<\/p>\n

ECB officials may however be nervous about waiting too long to act, especially after facing criticism for moving too slowly to tame the inflation surge in 2022.<\/p>\n

Most analysts stress the economic backdrop now is different to that in 2022; inflation was already elevated before the outbreak of the Ukraine war, and the global economy was struggling with post-pandemic supply chain woes.<\/p>\n

Given that, they don’t expect the bank\u2019s move this week to herald the start of an aggressive rate-hiking cycle.<\/p>\n","protected":false},"excerpt":{"rendered":"The\u00a0ECB\u00a0has kept borrowing costs on hold for some time as eurozone price rises had been largely under control.…\n","protected":false},"author":2,"featured_media":63342,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2388],"tags":[2494,16566,2803,1858,36149,633,36150,19642,18976,4024,2490,111],"class_list":["post-63341","post","type-post","status-publish","format-standard","has-post-thumbnail","category-european-central-bank","tag-as","tag-cyprus-mirror","tag-ecb","tag-european-central-bank","tag-hike","tag-inflation","tag-mideast","tag-pushes","tag-rates","tag-to","tag-up","tag-war"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts\/63341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/comments?post=63341"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/posts\/63341\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/media\/63342"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/media?parent=63341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/categories?post=63341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/europe\/wp-json\/wp\/v2\/tags?post=63341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}