The ECB is expected to raise its key rate next week — its first move since 2011
— aiming to send a clear signal on inflation. Economists warn the action risks
repeating 2011, when two oil-driven hikes were quickly reversed after
policymakers misjudged a sovereign-debt-hit euro area, costing the central bank
credibility. Sami Char, chief economist at Lombard Odier, said they spent a
decade rebuilding trust and risk repeating that error. Holger Schmieding, chief
Economist at Berenberg, said a June hike may withstand the current shock with
limited damage, but further tightening could delay recovery after Iran-related
developments and might even push the euro area into a short, avoidable
recession.
