The European Central Bank will meet in Amsterdam on Thursday for their first policy meeting outside of Frankfurt since the COVID pandemic. It is expected they will announce their intention to raise interest rates next month.

The ECB will need to end its net asset purchases first, so although inflation was at another record high in May, the rate hikes will not come until July.

While analysts debate how aggressive the rate hikes over the coming months will be, most believe an aggressive rate hike will come by September at the latest.

Mark Wall, a chief economist with Deutsche Bank, said in a research note, “A handful of Governing Council members are already open to a 50bp hike. We believe the ECB is continuing to underestimate inflation and we expect support for a 50bp hike will increase as the summer progresses.”

This week the ECB will release their staff projections for inflation and growth, with the inflation print being closely watched as it will be the bank’s medium-term price target.

Analysts expect it will also downgrade its growth forecasts and increase its inflation projections. The 2024 inflation number is expected to hit 2%, which is the medium-term target of the ECB.

Inflation is the primary concern of the policymakers on the Governing Council.

Francois Villeroy de Galhau, France’s central bank governor, said, “Inflation is not only too high, but also too broad. This requires a normalization of monetary policy — I say normalization and not tightening.”