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Forward Guidance

Europe facing first rate rise in two years as global central banks eye US-Iran fall out

The RBA has another week to contemplate the Middle East crisis as global counterparts make rate decisions.

Jennifer Duke
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European Central Bank President Christine Lagarde has been cautioning for months that cautioned that financial markets have underestimated the economic upheaval from the US-Iran war. AAP Image/Te-Co/IPA/Sipa USA.

With the US-Iran war continuing to disturb markets, economists across the world are increasingly expecting the Middle East crisis-driven higher inflation to start pushing rates upwards.

And while the Reserve Bank of Australia will meet in just over a week to make its June decision on interest rates — which is expected to deliver a pause after three consecutive increases — it will follow a decision from the European Central Bank this week that could well be its first rate rise since June 2024.

Here’s what you need to know about the key economic data releases this week.

Euro Zone rates decision

The European Central Bank last moved in June 2025 to lower interest rates with inflation easing to around 2% on its medium-term targets amid lower assumptions for energy prices and a stronger euro. And the ECB hasn’t increased rates in about two years.