Citi sees potential for two ECB hikes this summer as Hormuz disruption lingers in World Economy News 28/04/2026 Citigroup has revised its outlook for European Central Bank (ECB) monetary policy, now forecasting two quarter-point rate increases in June and July, followed by an extended pause, as uncertainty over the closure of the Strait of Hormuz and hawkish signals from policymakers shift the calculus on rates. The bank’s economists including Arnaud Marès said they do not expect the Governing Council to act at its April 30 meeting, but warned that the bar for summer hikes has fallen. “Consistent hawkish communication by Governors and a lower confidence in a quick resumption of shipping traffic through the Straits of Hormuz compelled us to revise our ’modal’ expectation to now include two rate hikes in June and July,” they wrote. However, the team underlined that the revision “does not reflect a strong conviction that this is the rate path that will materialise.” The Strait of Hormuz remains the single most critical variable, and the economists said they have no means of predicting when or whether shipping traffic will resume. The forecast would be revisited as military and political developments unfold. “We are in a situation where the range of possible outcomes remains wide,” they wrote. For the near term, Citi maintained that the cost of postponing a decision is low relative to the risk of moving too early. If the Strait were to reopen quickly, a preemptive hike “could be seen ex post as a panic move and be detrimental to credibility,” the economists noted. On the medium-term inflation picture, the economists argued that the current shock is stagflationary rather than demand-driven. Higher energy prices, they said, are eroding consumer spending, particularly on discretionary items, which should limit the pass-through from headline to core inflation. Since February, the bank revised its 2026 euro area GDP forecast down to 0.9% from 1.3%, and lifted its headline inflation projection to 2.9% from 1.8%. “This is nowhere close to the 2022 price shock, but still implies yet another departure from the ECB target, on the upside,” the note said. Citi also addressed why any hikes are unlikely to be quickly reversed, as they were in 2011. Economists pointed to an expected medium-term shift toward more expansionary fiscal policy in Europe — on defence, energy, and technology — which would argue for keeping rates higher for longer even if near-term hikes prove premature. ECB President Christine Lagarde’s comments following the March meeting, flagging that inflation expectations are shaped by people’s “memory” of past inflation, were cited as evidence the Governing Council may be quicker to act than previously assumed. Source: Investing.com 2026-04-28 hellenicshippingnews... window.___gcfg = {lang: 'en-US'}; (function(w, d, s) { function go(){ var js, fjs = d.getElementsByTagName(s)[0], load = function(url, id) { if (d.getElementById(id)) {return;} js = d.createElement(s); js.src = url; js.id = id; fjs.parentNode.insertBefore(js, fjs); }; load('//connect.facebook.net/en/all.js#xfbml=1', 'fbjssdk'); load('https://apis.google.com/js/plusone.js', 'gplus1js'); load('//platform.twitter.com/widgets.js', 'tweetjs'); } if (w.addEventListener) { w.addEventListener("load", go, false); } else if (w.attachEvent) { w.attachEvent("onload",go); } }(window, document, 'script')); tweet Share