ECB interest rate decision: Key interest rates in the euro area remain constant

The ECB remains wary of inflation risks: “The Governing Council will closely monitor the situation and take a data-driven approach to determining the appropriate monetary policy stance and decide on a meeting-by-meeting basis,” says the text accompanying the interest rate decision. We are eagerly awaiting what the ECB boss will say Christine Lagarde will speak to the press about the future course.

Financial markets are speculating about interest rate hikes in June

There is speculation on the financial markets about an interest rate hike in June. From the perspective of many traders, this is supported by the fact that there will probably be more clarity about the macroeconomic consequences of the oil price shock by the middle of the year. However, the ECB is in a dilemma because with a tighter monetary policy it could dampen price increases, but in the worst case scenario it could also stall the already struggling economy. The economy in the euro area only grew minimally by 0.1 percent in the first quarter: “The brake effects caused by the Iran war are causing a crunch in the framework. The support through government spending is offset by losses in purchasing power due to energy prices,” explains the chief economist at Hauck Aufhäuser Lamp Private Bank, Alexander Krüger. He also urges caution if there is an easing of tensions in the region: “Once the Strait of Hormuz opens, energy prices will only return to normal hesitantly.” All eyes are currently focused on this strait on the Persian Gulf, which represents a bottleneck for the international shipping of oil and liquefied natural gas.

According to ECB boss Lagarde, the central bank is ready to act if the data situation requires it. However, according to many analysts, the central bank is likely to remain silent. This could buy time to get a better overview of whether the inflation surge is becoming more entrenched.