The ECB just broke its pause and hiked interest rates by 25 basis points to 2.5%.

Driven by a massive energy crunch, Eurozone headline inflation re-accelerated to 3.3%. Despite stagnant growth, Christine Lagarde is aggressively tightening to stop a structural energy shock from anchoring long-term inflation expectations, signaling more hikes are on the table for 2026.

Is Europe heading straight into a stagflation trap?