Finance

Executive summary

Markets assign >90% odds that the ECB will raise the deposit rate by 25 bps at its 10–11 June meeting as energy-driven price pressures push inflation forecasts above target, setting up policy divergence with other majors. Beijing’s bond-swap is shrinking hidden local-government debt, but large LGFV operational liabilities continue to strain liquidity and constrain the scope for broad stimulus. The new US‑EU Action Plan on critical minerals embeds tools like price floors and offtake guarantees, making a long-run “national-security premium” on key inputs likely for EV, clean energy and defence supply chains. In the UK, political scrutiny and the EU AI Act are pushing the FCA toward more prescriptive AI governance by end‑2026, raising cross‑border compliance complexity for financial institutions.