Nordea’s latest analysis points to stronger prospects for an ECB rate hike in June, driven by inflation data that keeps resisting the usual cooling story. The desk’s framing is simple. Persistent inflationary pressures and shifting policy signals have raised the chance the ECB moves from steady rates to a tighter stance.
Nordea highlights core inflation as the main problem. Core inflation, which excludes volatile energy and food items, remains above the ECB’s 2% target. The report also points to accelerating wage growth across several eurozone countries, which can feed domestic demand and keep price pressure alive.
The analysis also claims the ECB’s communication has changed. Nordea says recent speeches by ECB officials hint at a hawkish turn, with emphasis on controlling inflation. The source text contrasts this with earlier dovish tones, and notes that markets now price a higher probability of a June hike.
A June hike, according to the source text, would be the first increase in over a year. The ECB deposit rate is cited at 3.75%. The text says a June hike could move it to 4.00% or higher, tightening financial conditions that are meant to cool demand and pull inflation down. It also flags the trade-off, a tighter stance could slow economic growth.
The provided figures used in the story include headline inflation at 2.4% and core inflation at 3.1%. After Nordea’s analysis, the source text says the euro strengthened against the US dollar by 0.5%, bond yields rose, and the eurozone rate hike probability jumped to 70%. It also cites a German 10-year Bund yield rising to 2.45% and says stock markets delivered mixed reactions.
Timing matters. The text calls out the June 12 ECB meeting and the release of new economic projections as the next checkpoints. It also notes other institutions align with the view. Goldman Sachs expects a June hike and JPMorgan sees a high probability. Still, the source text includes a caution from other economists, warning that weak eurozone growth could get worse under higher rates.
For context, the source text compares the current cycle with 2022, when the ECB raised rates aggressively, including 75 basis points at some meetings.