European Central Bank policymakers saw the need for a cautious approach to normalization amid rising geopolitical risks and chose to wait for the macroeconomic projections in March to make a better assessment of the outlook for euro area, minutes of the latest rate-setting session showed Thursday. "Geopolitical tensions had increased, and a prolonged phase of high energy costs constituted a material downside risk to consumer spending and investment, while also increasing cost pressures in energy-intensive sectors and elevating the risk of second-round inflation effects through higher nominal wage settlements," the minutes, which the ECB calls the 'account', of the February 2-3 Governing Council session showed. Less than a month from February's policy-making session, the geopolitical situation, especially in Europe, worsened dramatically with the escalation of the Russia-Ukraine crisis. During the February session, ECB warned that inflation could be higher than anticipated over the next few months if the surge in energy prices intensified, especially if geopolitical tensions were to escalate further. Persistent sluggishness in oil supply and further extension of the bottlenecks in production and international commerce would also keep inflation higher.
Eurozone inflation accelerated further in February to hit a fresh record high of 5.8 percent, driven by energy prices, data from Eurostat showed earlier this week. Core inflation rose to 2.7 percent. Beyond the near term, inflation could be higher than foreseen if current price pressures fed through into higher than anticipated wage rises, or if the economy returned more quickly to full capacity than considered likely at present, the ECB said. ECB rate-setters expected the growth outlook to improve significantly in the latter part of this year.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.