ABN AMRO Bank said ECB President Lagarde has signaled June would be an
appropriate time to assess the Iran conflict’s impact and update forecasts.
April policy decisions and subsequent comments point to a high probability of a
rate increase at the upcoming meeting. ABN AMRO expects the ECB to raise
inflation forecasts, signal the possibility it may need to tighten further, and
potentially follow with a 25bp hike in July. Despite a slowdown in euro-area
growth, policymakers remain more concerned about inflation than activity.
Markets have fully priced a June hike; attention will focus on the ECB’s updated
forecasts and guidance on the post-meeting rate path.
