On June 3rd, according to a Reuters survey of economists, the European Central Bank is set to raise its deposit rate to 2.25% on June 11th, and may raise it again in September. The central bank is weighing the relationship between energy driven inflation and economic weakness. The inflation rate in May was 3.2%, far higher than the European Central Bank's target of 3.0%. What is even more worrying is that the growth rate of core inflation has exceeded expectations, reaching 2.5%, indicating that the impact of the Iran War is pushing up prices. Recent indicators, including PMI surveys and official data, indicate that the economy is slowing down. As the war continues for more than three months without a clear solution, the situation may further deteriorate, and the Strait of Hormuz remains severely blocked. Most policy makers have made it clear that a rate hike in June is inevitable, and even if a peace agreement is reached, it will be difficult to prevent this move. However, economists believe that factors such as economic weakness, labor market weakness, and interest rates that are already at a higher level compared to the surge in inflation in 2022 all indicate that aggressive tightening policies are not advisable.