Overview
- The ECB raised its deposit facility rate by 25 basis points to 2.25% at its June meeting to counter an energy-driven jump in prices.
- Eurozone inflation slowed more than expected to 2.8% in June, a move that has reduced market bets on another rate increase in July.
- A faster-than-expected retreat in oil prices has eased near-term pressure on policymakers but officials warn the energy shock is still in the system and could reassert itself.
- Rising U.S. Treasury yields and a stronger dollar have pushed the yen to around 163 per dollar, raising the risk that Japan may intervene in FX markets.
- Eurosystem staff project 2026 headline inflation near 3.0% and the ECB will decide policy on July 23 while keeping the option to tighten again if data show persistent second-round effects.