ECB's Makhlouf Reaffirms 2% Inflation Goal, Avoids June Rate Comment
ECB Governing Council member Gabriel Makhlouf reiterated the central bank's commitment to its 2% inflation target but declined to signal whether a rate hike is coming in June, keeping markets guessing on the next policy move.
European Central Bank Governing Council member Gabriel Makhlouf said the ECB remains committed to bringing inflation back to its 2% target, but declined to comment on whether a rate hike is likely at the June policy meeting. Speaking in Dublin, Makhlouf emphasized that the central bank will base its decisions on incoming data, avoiding any forward guidance on the timing of the next move.
The remarks come as markets are pricing in a roughly 60% probability of a 25-basis-point rate hike in June, according to swaps data. Makhlouf's refusal to confirm or deny the move leaves traders reliant on economic releases and other ECB speakers for clues. The ECB has been navigating a delicate balance between combating persistent inflation—still running above 2% in the euro area—and avoiding a recession. For rates traders, the key driver remains the inflation outlook and wage growth data, which will influence the pace of tightening. NowPrice's real-time rates quotes show the euro-area swap curve steepening slightly on the day, reflecting uncertainty about the terminal rate.
Looking ahead, traders will focus on the euro-area consumer price index release for May, due next week, which could solidify or weaken the case for a June hike. Additionally, comments from other ECB officials, particularly President Christine Lagarde and Chief Economist Philip Lane, will be scrutinized for any shift in tone. The ECB's June meeting is now the key event risk for euro-area rates, with markets fully pricing in at least one more hike but uncertain about the exact timing and magnitude. Makhlouf's cautious stance suggests the ECB wants to keep optionality open, especially given the uneven recovery across member states.