Key facts
- Eurozone headline inflation rose to 3.2% year-over-year in May.
- Core CPI increased to 2.5% year-over-year from 2.2% in April.
- ECB policymaker Rehn stated a June rate hike would be an 'insurance' move.
- Markets anticipate an ECB rate hike at the June meeting.
- Iran is reportedly still reviewing a proposed agreement with the US.
Eurozone inflation increased to 3.2% year-over-year in May, driven by higher energy prices, with core inflation also ticking up. This data supports expectations for the European Central Bank (ECB) to raise interest rates at its June meeting. Policymakers, like Rehn, are framing this potential hike as an 'insurance' measure against future inflation risks, suggesting a cautious approach to further tightening. Meanwhile, negotiations between the US and Iran over a potential agreement continue, with Iran reportedly still reviewing the final text and seeking amendments, indicating that a deal is not imminent despite some market optimism.