Overview
- Both the European Central Bank and the Bank of England are expected to leave rates unchanged this week as they assess the inflation hit from the conflict involving Iran.
- Investors now price UK rate increases in July and September, even though most economists expect an 8-1 vote to hold this week and no hikes this year.
- Eurozone inflation rose to 2.6% in March, and the ECB warns that higher energy costs could push prices much higher in severe scenarios.
- ECB President Christine Lagarde calls the outlook a double uncertainty because no one knows how long the shock will last or how strongly it will feed into wages and broader prices.
- The BoE plans to publish fresh projections that point to higher inflation and weaker growth, and a hold keeps UK tracker mortgage payments unchanged for now.