ECB policymaker Lane says inflation outlook is highly dependent on US-Iran war
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Speaking to Irish broadcaster RTÉ, ECB's Lane said inflation could remain around 3% for the rest of the year, although he stressed that the outlook is highly dependent on how the US-Iran conflict develops. Eurozone inflation already accelerated to 2.9% in July, moving further awa
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The desk views the ECB's potential pivot towards rate hikes as increasingly likely, driven by rising inflation expectations linked to geopolitical tensions, particularly the US-Iran conflict. Per the full note [source], ECB Governing Council member Madis Muller indicated that inflation is set to accelerate, which could necessitate a rate hike unless energy prices decline significantly. The market is currently pricing in a 77% probability of a rate hike in June, with expectations of 70 basis points of tightening by year-end, underscoring the urgency of the ECB's response to inflationary pressures.
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