Overview
- U.S. headline inflation rose to 4.2% year‑on‑year for May, the highest in three years, with most of the rise traced to higher oil, fuel and energy prices.
- The European Central Bank raised its key rates by 25 basis points on Thursday, taking the deposit rate to 2.25% and revising its staff projections up for inflation and down for growth.
- Money‑market rates have moved higher after the ECB decision and analysts at Facile.it estimate variable mortgage payments in Italy rose by about €16 immediately and could average roughly €50 more per month by year‑end if rates keep rising.
- The Federal Reserve faces a policy decision at its meeting next Wednesday that will be the first chaired by Kevin Warsh and markets are reassessing the odds of rate moves while political pressure grows following President Trump’s public comments on the inflation numbers.
- The root cause remains the Middle East conflict and disruptions to shipping through the Strait of Hormuz, a shock that has raised global energy prices and coincides with signs of economic strain such as a sharp year‑on‑year drop in Saudi industrial output.