Resume af teksten:
Central bankers in Europe are considering interest rate hikes in June. However, there may be limited clarity on inflation, as headline inflation is expected to rise to around 4%. Consumer inflation expectations have also increased. The ECB may not gain significant insights into inflation persistence or second-round effects by June. Oil prices remain high, with potential geopolitical developments possibly affecting future supply and prices. In the United States, non-farm payrolls are expected to see modest growth in April. Poland’s central bank is likely to maintain its rate in May. Hungary will monitor April’s inflation data closely. The Czech Republic’s PMI may soften, with inflation possibly rising, but the central bank is expected to keep rates unchanged. Turkey anticipates April’s inflation to remain high. Armenia and Azerbaijan are expected to hold policy rates steady amid geopolitical tensions affecting global commodity prices.
Fra ING:
European central bankers are threatening rate hikes in June. But if they’re hoping for clarity on inflation over the next six weeks, they’re likely to be disappointed, argues James Smith. Come for the niche economics memes, stay for our preview of the week ahead…
Source: Imgflip
The big June gamble
Don’t ask me why, but this week’s European Central Bank meeting got me thinking about a meme from The Simpsons . The one with the bus driver who silently taps a sign reading “Don’t talk to the driver” every time a passenger strikes up conversation.
Christine Lagarde could have saved herself a lot of effort this week by doing much the same. A gentle tap on a banner saying “We’re hiking in June unless energy prices collapse” would probably have covered most of the questions.
She didn’t put it quite that bluntly, of course. But she did say the Governing Council had a lengthy discussion about hiking. She said the ECB is moving away from its previous baseline, towards a world implicitly associated with higher interest rates. And, most tellingly, she said “directionally” that she knew where rates were heading.
If that still wasn’t explicit enough, an inevitable “ECB sources” quote soon followed, suggesting a June hike is highly likely.
What stood out more to me, though, was Lagarde’s suggestion that the ECB would have “a lot more information” on how the crisis is feeding through to inflation by the June meeting, just six weeks away.
That feels optimistic.
Yes, headline inflation is going higher. It’s already at 3% and our team expects it to push towards 4%, broadly consistent with the ECB’s “adverse” March scenario, and the one Lagarde now appears to be emphasising.
And yes, consumer inflation expectations have jumped, too. Data this week showed households expect inflation of 3% three years out, up from 2.5%, matching the highs of 2022. Something similar has happened in the UK.
That’s already two of the three warning lights Carsten Brzeski identified in his ECB preview .
But neither tells us much about persistence, nor about the strength of second‑round effects. And that will take time. Food inflation – one of the clearest channels for energy prices to feed through – is unlikely to peak before next winter.
It may take even longer for inflation pressures to show up in prices less directly affected by energy. Think services that are repriced annually. Or wages, which in Europe are governed by slow, multi‑year bargaining processes.
True, the ECB and other central banks will see more survey data by June. So far, those hint at only partial pass-through from higher input costs to output prices. But most businesses, like the rest of us, still don’t really know how this crisis will affect them – let alone where the crisis itself is headed.
It’s not at all clear that we will be much the wiser by June. There’s a growing view in energy markets that the current stalemate could drag on. Dated Brent – physical oil ready for delivery – is trading around $122/bbl, some $10 higher than a week ago.
Then again, geopolitical experts point to a planned meeting between Presidents Trump and Xi in mid-May, and whether the US will want it to be overshadowed by events in and around the Gulf. That raises at least the possibility of a deal that allows some tankers to move again.
Our own updated oil forecasts are based loosely on a scenario where disruption to oil flows reduces from 70% today to 35% through May. If that entails a fragile, volatile truce in the Strait without a broader conflict resolution, then I think it would pose a significant dilemma for central banks in June.
The question is what matters more, the volume of oil already lost along with the supply‑chain impact that has already been baked in? Or the flow of oil and gas going forward, which – even if uncertain and only partially restored – could push energy prices lower over the summer?
For June, my money is on the former. As long as markets are pricing rate hikes this year – and as long as that keeps inflation expectations contained – there’s only so long central banks will feel able to stay on the sidelines. A June ECB hike is our base case, and after this week’s meeting, it is for the Bank of England , too.
Whether those hikes come about because officials have more clarity on the inflation outlook, I’m not so convinced. And whether those hikes are repeated again in September and beyond is equally questionable, in the sort of base case scenario described above.
A lot can still happen over the next six weeks; a gradual return of oil flows is one of many scenarios, each as (im)plausible as the next. A decisive reopening of the Strait of Hormuz and a sharp fall in energy prices is no doubt a wildcard.
If that happens, well, central banks might just take inspiration from another of those famous Simpsons memes…
Like Homer, central banks might feel like hiding in a hedge…
Source: Imgflip
THINK Ahead in developed markets
United States (James Knightley)
NFP (Fri): The monthly increases in non-farm payrolls have averaged only 20,000 since January 2025. So, if the US couldn’t meaningfully add jobs when the economy was growing robustly and sentiment was strong, it’s going to be much harder with huge economic and geopolitical challenges stemming from the Middle East conflict. The ISM employment indices point to contraction while job lay-off announcements remain elevated and consumer confidence surveys suggest sentiment on jobs remains depressed. Yet jobless claims are very low, and the ADP weekly employment statistics have been good. Considering that payrolls surged 178,000 in March with private payrolls rising 186,000, we expect to see a gain closer to 50,000 for April with employment again concentrated in private education and healthcare services.
ISM index (Tue): Other numbers to watch include the ISM services index, which is likely to soften a touch from strong levels, given the surge in oil costs. New highs for gasoline will also dampen consumer sentiment, with the University of Michigan measure potential hitting new series lows as households fret about spending power.
THINK Ahead in Central and Eastern Europe
Poland (Adam Antoniak)
NBP decision (Wed): Even though gasoline price increases were halted in April, partly due to cuts in VAT and excise duties, and food price growth slowed further in annual terms, headline inflation increased to 3.2% year-on-year last month on the back of higher core inflation. This might be a warning sign for some policymakers, but we expect the National Bank of Poland (NBP) to keep rates unchanged in May (main policy rate still at 3.75). We believe rate setters will stick to a wait-and-see approach and to continue to monitor incoming economic data to assess the impact of the current energy shock on both inflation dynamics and economic activity.
Hungary (Peter Virovacz)
Inflation (Fri): We are heading into an extremely busy week for Hungary, but the most relevant data release comes on Friday. The April inflation figure will be closely watched by the markets and by the National Bank of Hungary. The March figure was a pleasant surprise, showing only mild acceleration in the initial wave of price shocks resulting from the war in the Middle East. With the fuel price cap still in place, our focus is on the second-round effects, and we anticipate a limited impact with a 0.6% monthly repricing. The key mitigating factor is the strength of the forint. Services, durables and clothing will be among the drivers of price pressures, while household energy will dampen price pressures due to methodological reasons.
Czech Republic (David Havrlant)
PMI (Mon): The industrial PMI likely softened in April, as elevated oil and natural gas prices along with substantial geopolitical uncertainty began to bite. A tangible deterioration is likely to be seen over the coming months, with conditions becoming more difficult amid the ongoing conflict in the Middle East. Inflation in April is likely to have increased, driven by further gains in fuel prices. That said, we assume that prices in other parts of the consumer basket have also gained traction. Industrial output in March likely maintained its positive growth pace, as the effects of weakening demand and emerging supply‑chain disruptions are only likely to become visible with a lag. Despite the pickup in inflation, the Czech National Bank will likely hold rates unchanged, as the negative consequences for economic activity are expected to follow suit. Being in a relatively comfortable position, policymakers can take a wait-and-see stance for all the right reasons.
Turkey (Muhammet Mercan)
Inflation (Mon): We expect April inflation to remain high at 2.9% (translating into 30.7% on an annual basis) given the ongoing pressures linked to geopolitical developments and the high and volatile energy prices. Accordingly, administrative price adjustments in electricity and natural gas will determine the April inflation, while signals of a slowdown in economic activity are likely to be a restraining factor, in our view.
Armenia and Azerbaijan (Dmitry Dolgin)
Rate Decisions: We expect the central banks of Armenia (5 May) and Azerbaijan (6 May) to keep the policy rates on hold – at 6.50% in both cases. This would follow the example of Kazakhstan and Uzbekistan , which also opted for unchanged policy rates reflecting a mix of domestic and external risk factors. While the current domestic CPI trends in the CIS region appear to be largely benign, the ongoing tensions in the Middle East and the resulting increase in global commodity prices call for region-wide caution in terms of monetary policy , in our view.
Key events in developed markets next week
Source: Refinitiv, ING
Key events in EMEA next week
Source: Refinitiv, ING
Hurtige nyheder er stadig i beta-fasen, og fejl kan derfor forekomme.
