Overview
- European Central Bank officials have publicly signalled a policy shift and markets are pricing a June rate increase as the ECB revises 2026 inflation up and warns the energy shock could feed into broader price growth.
- Japan’s new BOJ trend gauge showed underlying inflation at 2.8% in April, a reading that has strengthened market bets on a near‑term rate hike and pushed debate at the central bank about the pace of tightening.
- Sri Lanka responded to the energy‑driven inflation and currency pressure with an aggressive 100 basis‑point interest‑rate increase to 8.75% to stabilise prices and shore up reserves.
- Australia’s April headline CPI fell to 4.2% after a temporary halving of the fuel excise, while the trimmed‑mean core measure rose to 3.4%, leaving the Reserve Bank of Australia cautious about further action.
- Rising fuel costs are already feeding into firms’ input‑cost and price expectations across the euro area and beyond, creating a real risk of second‑round effects that could force more central banks to tighten policy and raise living costs for households.