European Central Bank: Will it only hike rates once, or more? Inflation is rising, but long-term pressure remains limited.

Affected by the Middle East situation, inflation expectations have picked up in the short term. The market expects the European Central Bank to raise interest rates by 0.25 percentage points in June.
However, this rate hike is likely a “phase-specific move,” rather than the start of a prolonged tightening cycle. The reason is simple: the price shock caused by the conflict is more of a short-term disruption than a structural bout of inflation.
The latest forecasts show that inflation may rise to 2.8% before 2026, then gradually fall back to 2.1%, reaching close to the 2% target level in 2027.
It is worth noting that within the European Central Bank, policymakers remain cautious. At the end of April, it is highly likely that rates will be left unchanged, but some officials (including representatives from Germany’s central bank) still leave open the possibility of action at any time.