ING argues that central banks are preparing to tighten policy into an energy-driven inflation shock, despite limited visibility on its persistence or economic impact.
- The ECB is signalling a likely June rate hike, even as inflation dynamics remain highly uncertain.
- Headline inflation may rise toward ~4%, but second-round effects in wages and services will take longer to materialise.
- Energy markets remain volatile, with scenarios ranging from partial supply recovery to prolonged disruption, complicating policy decisions.
Central banks are being forced to act before they understand the shock. Whether that resolves inflation—or deepens the cycle—remains open.
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