- This will cause headaches for interest rate setters in the single currency area.
- Rate hikes unlikely to stop the ECB from cutting rates by 0.25 percentage points
Headache: ECB President Christine Lagarde
Eurozone inflation rose to a higher-than-expected 2.6% last month, official figures showed.
That will create a headache for the single currency area's interest rate setters, including European Central Bank President Christine Lagarde.
The hike from April's 2.4% is seen as unlikely to stop the ECB from cutting rates by 0.25 percentage point on Thursday.
However, economists had expected a figure of 2.5%.
Also, with inflation being stronger than expected, the ECB is less likely to cut interest rates in July after cutting them in June.
“The European Central Bank looks set to cut interest rates next week, but debate will heat up over how much the ECB can ease the brakes on the economy for the rest of the year,” said Bert Collin of ING Bank.
