ECB Signals Tightening Cycle as Diesel Prices Threaten Eurozone Inflation

The European Central Bank (ECB) has begun a tightening cycle, according to comments from Vice President Boris Vujcic.

Vujcic warned of a risk that energy prices remain higher for longer, which could complicate the inflation outlook.

Diesel prices are expected to stay elevated for an extended period, feeding through to inflation and forcing policymakers to keep interest rates elevated.

The ECB sees a mismatch between crude oil prices, which appear more likely to decline than refined products like diesel. This dynamic could push Eurozone inflation back up this autumn.