ECB cannot ignore surging inflation for long

With euro-zone inflation having jumped to 7.5% in March it seems increasingly likely that the ECB will accelerate its plans to tighten monetary policy. We now think it will begin raising rates as soon as July and that the deposit rate will reach around 1.5% by end-2023. Meanwhile, we expect Russia to continue selling gas to Europe for now, but President Putin’s demand that payments be made exclusively in rubles has highlighted the risk that a political dispute or misjudgement leads to an outright shortage of power.