European markets are entering a challenging phase.

Fresh economist surveys show growing expectations that the European Central Bank will continue tightening policy, even as concerns about stagflation increase across the Eurozone.

Economists Expect More ECB Tightening

According to the latest poll:

• 74 of 80 economists expect the ECB deposit rate to reach 2.25% on June 11.
• 49 of 80 economists expect two ECB rate hikes during 2026.

The shift suggests policymakers remain focused on inflation despite signs of slower economic growth.

Stagflation Concerns Are Building

A separate survey showed that 28 of 42 economists believe the risk of stagflation in the Eurozone is high this year.

Stagflation is one of the most difficult environments for central banks because it combines:

• Slowing economic activity
• Persistent inflation
• Pressure on consumers and businesses

That leaves policymakers with fewer easy solutions.

Trade Relations Remain in Focus

European officials also reiterated expectations that the US will respect the terms of the existing trade agreement, while discussions continue around tariffs and trade commitments.

For markets, trade stability remains important as economic growth across Europe faces increasing pressure.

Petra Traders Insight

The combination of higher rate expectations and rising stagflation concerns could keep volatility elevated in EUR-related assets.

Traders should closely monitor ECB commentary, inflation data, and Eurozone growth indicators as markets reassess the path of European monetary policy.

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