ECB Set to Hike Rates in June as Iran War Sends Energy Prices Soaring, Nagel Warns

The European Central Bank held its key interest rate at 2.0% last week, but Germany's central bank governor, Joachim Nagel, warned Monday that a rate hike is coming if inflation does not clearly improve. Speaking in Frankfurt, Nagel said the ECB's June 11 meeting, when new inflation and growth projections will be released, is the key decision point. ECB President Christine Lagarde had already signaled that a hike was actively discussed at last week's meeting. The Iran war is driving energy prices sharply higher, with oil jumping on Monday after the United Arab Emirates reported being targeted by Iranian drones in the Strait of Hormuz. Nagel warned that a prolonged conflict raises the risk of inflation staying elevated if central banks fail to act.