ECB Cautious on Rate Hikes Amid Euro-Area Inflation Rise

The European Central Bank (ECB) is likely to maintain its current monetary policy stance as inflation in the Euro-area continues to rise. According to a recent report by Nordea's Global Macro team, energy and food price increases are driving this trend. The team notes that while core inflation remains stable, broader price pressures are moderate.

The report highlights that predicting future energy prices is challenging due to high uncertainty in the oil market. On one hand, geopolitical tensions in the Middle East persist, but on the other hand, recent estimates suggest potential for positive surprises from global oil production and Red Sea traffic.

Nordea's forecast for ECB rate hikes remains unchanged, with no likelihood of a hike at the upcoming policy meeting.