The European Central Bank (ECB) at the end of the next meeting may announce plans to raise the key interest rate for the first time since 2011. Also, the ECB will present new economic forecasts, which are likely to show that inflation in the euro area will not fall to the target of 2% during 2024, writes Bloomberg.

Experts mainly predict that the European Central Bank will today announce its intention to end its asset purchase program in June and raise the deposit rate, currently at minus 0.5%, in July. The rate has been below zero since 2014.

Experts will wait for signals from the ECB on how much it plans to raise the rate in July, and at what pace it intends to increase it further, notes Dow Jones. Quotes of futures on the rate level show that the market estimates the probability of a rate increase by the European Central Bank by 50 basis points (b.p.) at the July meeting at 50%. The last time the ECB raised the rate by 50 bps was in 2000.

“The most likely outcome of the meeting will be an announcement by the Central Bank that it will start raising the rate in July and bring it to zero in the third quarter,” said Mohit Kumar, EMEA markets economist at Jefferies. – The most important thing to watch for is the tone of the ECB’s statements regarding the pace of rate hikes in July and September.”

ECB President Christine Lagarde probably won’t rule out the possibility of raising the deposit rate by 50 bps immediately, but won’t hint at it either, says Kumar.

The pace of consumer price growth in the eurozone accelerated to a record 8.1% annualized rate in May. High inflation has made even the most dovish members of the ECB Governing Council support the need to raise rates. At the same time, the central bank should seek to regain control of prices without pushing the eurozone economy into recession or triggering panic in the bond markets of southern Europe’s most vulnerable countries, the Financial Times said.

“Lagarde is in a difficult position and she realizes that,” said Klaus Adam, an economics professor at Mannheim University who is an adviser to Germany’s finance ministry. – The ECB seems to be hoping to bring inflation back to target with a relatively small rate hike. But what if that doesn’t work?”.

Lagarde has previously said that “the deflationary dynamics seen in the euro area over the past decade are unlikely to return,” even if rising energy prices are overcome and supply chains recover.

ECB leaders are more concerned about inflation than the pace of economic growth, says Pimco portfolio manager Konstantin Veit. The central bank is likely to decide to complete asset purchases this month and make it clear that it intends to raise the rate both in July and September, the expert believes.

“The market will wait for the slightest hints from the European Central Bank about what will happen after the summer, when the policy of low inflation era will be rolled back,” notes Matteo Cominetta, chief economist at Barings Investment Institute.

Experts do not rule out that the ECB will make it clear at the end of the June meeting that it is ready to support the debt markets of eurozone countries in the event of a sell-off of their bonds. The main part of the 25 members of the Governing Council is expected to support the proposal to create, if necessary, a new bond-buying program in case of a sharp rise in the cost of borrowing for countries such as, for example, Italy, notes FT.