Lagarde indicates the ECB will revise its 2.6% 2025 inflation projection upward, fueling rate hike expectations for June 11.
European Central Bank President Christine Lagarde signaled the bank’s March inflation forecast of 2.6% for 2025 will likely be revised higher at its June 11 meeting. The update follows evolving economic conditions since the projection’s release, including the Iran conflict’s impact on energy markets.
The March forecast was published shortly after the outbreak of the Iran war, which some policymakers, including Alexander Demarco, suggested may have been overly optimistic. Several ECB council members have since hinted at an unavoidable rate hike in June unless a lasting US-Iran peace deal materializes.
Markets are pricing in a 25-basis-point increase, with Lagarde emphasizing the need to assess all data before deciding. She declined to confirm whether the revised forecast would directly trigger a rate move.