ECB’s Rehn said that an interest rate increase at the ECB’s June meeting should be viewed as an “insurance” move to guard against future inflation risks, even if current inflation expectations remain well anchored.
The characterization of a June rate move as an “insurance hike” indicates that policymakers are unlikely to deliver a back-to-back rate hike in July as some analysts have been suggesting without a strong signal from the data.
The ECB is most likely to frame the move as an insurance and then wait at least until September to see how the data and the US-Iran situation evolves over the summer.
