European Macro Weekly

The ECB is preparing for a June rate hike to maintain credibility despite growth concerns, while the BoE is adopting a more patient approach due to recent soft UK data. Geopolitical optimism regarding a US-Iran deal has lowered oil prices, but persistent inflation pressures remain a primary concern for policymakers.

Key Takeaways

• 1.The ECB and BoE are diverging in their response to inflation; the ECB is signaling a likely hike in June while the BoE remains patient.
• 2.Energy prices have softened due to progress in US-Iran talks, but a high geopolitical risk premium is expected to persist.
• 3.Inflation in the euro area and UK is expected to exceed targets until at least next spring, with euro area HICP set to rise above 3%.

Table of Contents

• Macro focus – A tale of two central banks
• Macro Focus: A tale of two central banks
• What we're watching next week
• Key data releases and events (week commencing Monday 1 June)
• LEGAL ENTITIES AND BRANCHES
• GENERAL DISCLAIMERS
• COUNTRY AND REGION SPECIFIC DISCLAIMERS