Eurozone inflation remains stable, and ECB President Christine Lagarde stated on Monday that the easing of uncertainties resulting from US-Iranian efforts to resolve the conflict has lessened the necessity for aggressive rate hikes. The European Central Bank recently increased rates for the first time since 2023 to reassure markets about its commitment to controlling inflation amid energy price shocks caused by the partial closure of the Strait of Hormuz.
Following a memorandum of understanding signed by Tehran and Washington last week after almost 40 days of conflict and a fragile ceasefire, Lagarde addressed European Parliament lawmakers, highlighting the significant drop in energy prices. She emphasized that there is no indication of recent high prices translating into secondary effects such as increased wage demands, which could exacerbate inflation further.
Eurozone inflation climbed to 3.2 percent in May from 3.0 percent in April, surpassing the ECB’s two-percent target. Lithuanian central banker Gediminas Simkus anticipated another rate hike from the ECB, citing persistently high oil prices and an uptick in short-term inflation expectations.
