European Central Bank Governing Council member Yannis Stournaras indicated in an interview with Greek media that a rate hike in June is the most probable scenario, citing the prolonged conflict in the Middle East and its potential to sustain higher energy prices for an extended period.
"The most likely outcome is a rate increase in June," stated Stournaras, who also serves as Governor of the Bank of Greece. He emphasized that if inflation were to rise significantly but temporarily above target, the response should be measured. "A cautious adjustment of monetary policy towards a tighter stance can help contain the intensity of second-round effects without excessively impacting economic activity," he added.
Echoing this sentiment, Martins Kazaks, another ECB Governing Council member and Governor of the Latvian central bank, separately told media that the ongoing war is likely to keep energy prices elevated longer than initially anticipated, making a rate hike highly probable.
With surging energy costs driving inflation higher across the region, there is widespread market expectation that the European Central Bank will raise borrowing costs by 25 basis points at its June 11 meeting.
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