ECB's Kocher warns June rate hike unavoidable if Hormuz stays shut
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ECB Governing Council member Kocher says a June rate hike is unavoidable if the Hormuz Strait remains closed, warning prolonged conflict will push eurozone inflation materially higher. Summary: Kocher said if the Hormuz Strait remains closed and the Middle East conflict continues
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The desk interprets the ECB's recent commentary as a signal that the central bank is poised to act if geopolitical tensions in the Strait of Hormuz persist, potentially impacting their June rate decision. Per the full note [source], ECB's Muller emphasizes the need for a swift resolution to avoid a rate hike, despite current inflationary pressures. The Eurozone's modest GDP growth of 0.1% in Q1 and declining PMIs suggest underlying economic challenges, reinforcing the ECB's cautious stance. As the market anticipates potential rate hikes, the consensus among analysts remains divided, with some projecting two hikes this year depending on oil price movements and geopolitical developments.