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ECB Signals Inflation Upgrade as Mideast Tensions Drive Energy Costs Higher

The European Central Bank plans to revise its inflation forecasts upward at next month's policy meeting, with geopolitical pressures sustaining elevated energy prices across the bloc. Chief Economist Philip Lane indicated the revision reflects persistent cost pressures from the Middle East conflict. Executive Board member Isabel Schnabel has signaled support for an interest rate increase in June even if the Middle East conflict resolves quickly, underscoring the central bank's concern about inflation durability. The outlook contrasts with some European peers, as Hungary's central bank prepares to hold rates steady while contemplating potential cuts. Policymakers across major central banks are signaling readiness to tighten monetary conditions if inflation remains elevated.