TD Securities says with inflation re-accelerating and energy-driven pressures likely to spill into core prices and services, the ECB appears poised to raise rates 25bp to 2.25%. Markets treat a June hike as the start of limited tightening; the probability of a further move in September is about 65% and December is fully priced. Given the broadening inflation risk—energy-led increases feeding services, wages and expectations—TD Securities views this market pricing as reasonable. If incoming data

TD Securities says with inflation re-accelerating and energy-driven pressures likely to spill into core prices and services, the ECB appears poised to raise rates 25bp to 2.25%. Markets treat a June hike as the start of limited tightening; the probability of a further move in September is about 65% and December is fully priced. Given the broadening inflation risk—energy-led increases feeding services, wages and expectations—TD Securities views this market pricing as reasonable. If incoming data confirm underlying inflation is not easing fast enough, a September follow-up is likely.