PIMCO: ECB is sending a signal

PIMCO: ECB is sending a signal

June 12, 2026

Interest Rates ECB

Konstantin Veit, Portfolio Manager at PIMCO, commented on yesterday's ECB’s meeting. Below are a few highlights:

  • We do not see this as the start of an aggressive hiking campaign, but rather as a modest adjustment aimed at managing expectations.
  • As of today, we would not foresee the ECB to hike more than what is currently priced into financial markets.
  • A further hike would lift the ECB’s main policy rate to the upper bound of the range of its neutral rate estimates (1.75% - 2.5%), a move primarily aimed at influencing selling price and inflation expectations.
  • The longer the war related disruption persists, the more the focus will shift to an increasingly weak growth trajectory.
  • Euro area Q1 GDP has been softer than expected, and recent PMIs suggest another mild contraction in Q2.
  • Contrary to 2022, the negative supply shock is not amplified by a positive demand shock, alleviating the need for an extended hiking cycle.

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