Overview
- The ECB raised its deposit rate by 25 basis points to 2.25% in mid‑June as a response to an energy‑fuelled inflation surge.
- June consumer prices in the euro area slowed more than expected, with headline inflation dipping to about 2.8%, lowering market odds of a follow‑up hike next month.
- A surprisingly quick fall in oil prices has eased immediate urgency for further tightening, though Eurosystem staff still project headline inflation near 3.0% for 2026.
- Senior ECB officials stressed the energy shock has not been fully neutralized and said policy will remain meeting‑by‑meeting so further hikes remain possible if inflation proves persistent.
- Global market moves have complicated the outlook as U.S. yields and the dollar have risen and the yen plunged to four‑decade lows near 162–163 per dollar, raising intervention and spillover risks for the euro area.