The last time the European Central Bank raised interest rates into an economic headwind, it helped tip the eurozone into a full-blown debt crisis. Economists are now warning the ECB is about to do it again.
The ECB’s Governing Council meets June 9-12 to deliberate on hiking interest rates in response to inflation that hit 3% in May 2026, the highest reading since September 2022. The benchmark deposit facility rate currently sits at 2%, and the pressure to act on prices is real. But so is the risk of breaking something.
The ghost of 2011
In April and July of 2011, then-ECB President Jean-Claude Trichet raised rates twice to combat inflation. Within months, the eurozone sovereign debt crisis spiraled, economic growth cratered, and the ECB was forced to reverse course entirely.
Economists at TS Lombard and Berenberg see uncomfortable parallels forming. Davide Oneglia, an economist at TS Lombard, put it bluntly.
