The Governor of the Bank of Greece and ECB Governing Council member, Yannis Stournaras in a Wednesday interview with Greek newspaper Kathimerini acknowledged that while inflation overshoots might be temporary, the current environment necessitates a “careful adjustment” toward restrictive policy and a rate hike in June is now highly likely. He said that the primary goal of the hike is to prevent second-round effects without causing excessive damage to economic activity.

Stournaras has historically been an advocate for maintaining low rates to support Eurozone growth, particularly in Southern Europe. His recent assertion that a June hike is the “most likely development” signals a shift in stance. Stournaras public support for a hike suggests a growing consensus within the Governing Council.

This reinforces the expectation of a 25 bps hike in June, as the central bank prioritizes price stability over the risk of a minor economic slowdown. The market has already priced in a rate hike in June with probabilities standing around 95%, so that’s not going to be a surprise and it’s unlikely to trigger meaningful reactions.

Traders will be focused more on the forward guidance with the ECB expected to take a pause at least until September to see how the economic data and the US-Iran situation evolve over the summer. It goes without saying, that everything could change on a dime if the Strait of Hormuz is reopened before the June meeting and oil prices fall quickly.