11 June 2026
If you’re covering the latest ECB interest rate decision, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
"The European Central Bank is the first major central bank out of the starting gate with a 0.25% rate hike. This move had long been priced in by markets, with policymakers’ recent hawkish rhetoric leaving little doubt about the direction of travel.
"Alongside the rate hike, the ECB has published its updated macroeconomic projections which show inflation climbing significantly higher than was previously expected. Forecasts for 2026 and 2027 have been revised sharply upwards to 3.0% and 2.3% respectively, from 2.3% and 2.2% previously, reinforcing the case for having a tighter policy stance for longer. Meanwhile, projections for economic growth have been revised down to 0.8% in 2026 and 1.2% in 2027 from 0.9% and 1.3% previously.
"Markets are already pricing in a further rate hike at the ECB’s September meeting, but whether that materialises will depend heavily on developments in the Middle East and whether and when a meaningful resolution can be achieved. If a resolution is not met soon, we can expect higher energy costs to persist and broader inflationary pressures to mount, meaning policymakers may be forced to act again.
"The attention will now shift to whether the other major central banks will follow the ECB’s lead, but for now that looks unlikely. The Federal Reserve is set to meet on Wednesday for its first rate decision under new Chair Kevin Warsh, and despite a hotter than expected inflation print this week, the expectation remains for rates to be held for now. However, a 0.25% hike is being priced in before the end of the year, with the potential for more in early 2027. This is the exact opposite of what Trump is wanting to see from Warsh, so we can expect substantial pressure coming from the White House in the months ahead. Meanwhile, the Bank of England is also expected to keep rates on hold when it meets next Thursday, and the upcoming GDP and inflation numbers will provide an important update on the health of the economy ahead of that decision.”
