ECB Preview: Heading for a Policy Mistake

The report criticizes the ECB's expected 25bp interest rate hike as a potential policy mistake that could worsen the Eurozone's stagflation. The author advocates for a 'wait and see' approach as energy price pressures from the Iran supply shock are unlikely to persist.

Key Takeaways

• 1.The author argues that a further interest rate hike by the ECB in June is a policy mistake that risks exacerbating the economic damage caused by the Iran war.
• 2.Economic indicators show stagflationary pressures with Eurozone business and consumer confidence dropping, while headline inflation has risen to 3.2%.

Table of Contents

• ECB PREVIEW: HEADING FOR A POLICY MISTAKE
• One and done?
• A clear case for a hike?
• ECB projections: a more dismal outlook
• Disclaimer