ECB's Kocher Warns Euro Inflation Will Linger as Deposit Rate Holds at 2.25%
Updated
Updated · The Business Times · Jun 18
ECB's Kocher Warns Euro Inflation Will Linger as Deposit Rate Holds at 2.25%
3 articles · Updated · The Business Times · Jun 18
Summary
Martin Kocher said euro-area consumer prices will stay elevated for some time even after the US-Iran peace deal restored a path for Middle East oil shipments.
Energy costs from the recent war have already fed into inflation expectations, selling prices and wage demands, leaving uncertainty over how quickly the economy and prices will cool.
Fresh ECB forecasts now show inflation returning to the 2% target only in 2028, after policymakers last week raised the deposit rate by a quarter point to 2.25%.
Markets and many economists still expect at least one more rate increase this year, while Kocher and IMF chief Kristalina Georgieva said oil prices and financial conditions need close monitoring.
The comments reinforce a broader ECB message that the peace deal improves the outlook for energy markets but does not end the euro zone's inflation shock overnight.
A Mideast peace deal was signed, so why are experts warning that Europe's inflation crisis won't end until 2028?
Is Europe's own fiscal policy sabotaging the ECB's battle against inflation, prolonging the economic pain for its citizens?
ECB Lifts Key Rate to 2.25% as Middle East Conflict Drives Eurozone Inflation Higher
Overview
The European Central Bank (ECB) raised interest rates on June 15, 2026, in response to persistent inflationary pressures across the Eurozone. A key driver of this inflation is the ongoing conflict in the Middle East, especially the Iran conflict, which has pushed energy prices higher. ECB President Christine Lagarde highlighted that this situation creates significant upward pressure on prices, while also exposing economic growth to downside risks. The impact of the war on inflation and growth depends on how long and intense the energy price shock lasts, making the ECB’s policy path cautious and highly dependent on evolving economic and geopolitical developments.