Analyst Weber says markets largely expect the ECB to lift rates later — the
first increase since 2023. The ECB faces a dilemma after a shock from the Iran
conflict: headline inflation is above 3% and inflation ex-food and energy has
accelerated to 2.5%, well above the 2% target, while growth appears hit —
business surveys show a sharp May downturn. A rate hike would heighten downside
pressure on activity, but consensus sees inflationary forces as large enough to
warrant action, which could mean further measures after tonight. Given high
uncertainty and ongoing US–Iran efforts to end hostilities, Lagarde’s wording is
likely to be deliberately vague; she will emphasize vigilance and close
monitoring of incoming data to avoid appearing complicated.
