ECB Hike: A 25-Basis-Point Rate Increase on the Table

The European Central Bank is expected to raise interest rates by 25 basis points at its upcoming meeting, but it's unclear if this will be enough to tackle inflation.

The ECB has shown an almost unexpected resilience to the war in the Middle East, partly due to good luck and Asian competitors being hit harder. However, headline inflation remains above 3% year-on-year, driven mainly by energy prices.

The ECB's staff projections will not bring significant changes but may remain supportive of a rate hike. The growth and inflation forecasts are expected to be revised upwards slightly due to earlier statistical upward revisions of first-quarter growth and slightly higher oil prices.