Stournaras Confirms June ECB Hike Most Likely as Inflation Hits 3%

ECB Governing Council member Yannis Stournaras stated on May 28 that a June rate hike is now the most probable outcome, capping a rapid hawkish shift driven by the Iran-related energy shock. Headline inflation jumped to 3.0% in April, prompting successive signals from Lane, Lagarde, Rehn and Demarco that the June 11 meeting will deliver a 25bp deposit-rate increase to 2.25%. Markets have priced an 80-95% probability of the move, pushing German Bund yields to multi-month highs and supporting EURUSD while officials stress data dependence and the absence of visible second-round effects.