UBP says Fed, ECB tightening stance persists despite falling oil prices

• Union Bancaire Privee flagged a widening gap between markets pricing disinflation and central banks staying hawkish despite falling oil prices.
• ECB lifted its key rate 25 bps to 2.25%, its first increase since 2023; the Fed dot plot showed half of members expect at least one hike.
• US inflation rose to 4.2% in May, the highest since April 2023; euro zone inflation held near 3.2%.
• UBP pointed to resilient US consumption and sticky core services ex-housing inflation, with surveys showing firms still planning price rises.
• UBP said AI investment is currently inflationary via chips, power, copper, steel, raising doubts central banks can ease even if oil stays weak.

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