With the Iran war fueling global inflation, the ECB is expected to raise policy
rates by 25bp next week, making it the first major G7 central bank to tighten.
Markets price at least one further hike this year. By contrast, the BOC may
hold, and the Fed and BoE are seen likely to remain on hold this month as they
assess the conflict’s impact. ECB officials say the move aims to prevent
inflation becomes entrenched, but further tightening will weigh on an
already-weak euro-area economy. ECB President Lagarde may signal next steps at
the post-decision press conference. The ECB will publish quarterly economic
projections that model alternative energy-shock scenarios.
