US-Iran Deal Still Unsettled as ECB Delivers 25-bps Rate Hike

Daily News

Summary:

Iran says no final conclusion has been reached on a US-Iran agreement; the European Central Bank raises interest rates by 25 basis points...

Top Headlines

1. Iranian Foreign Ministry: The Strait of Hormuz remains closed.

2. Iran says no final conclusion has been reached on a US-Iran deal.

3. Israel says Trump promised the US-Iran agreement would include the removal of Iran's enriched uranium.

4. Trump says the US-Iran agreement is in its final drafting stage and could be signed this weekend.

5. Israel says it has received no notification that a US-Iran agreement has been finalized.

6. The ECB raises rates by 25 basis points.

7. Yellen expects no US rate hikes in the coming months.

8. US May PPI posts the largest annual increase in three and a half years.

News Details

Iranian Foreign Ministry: The Strait of Hormuz Remains Closed

Iranian Foreign Ministry spokesman Esmaeil Baghaei said on June 11 local time that the Strait of Hormuz remains closed due to what he described as illegal actions by the United States. Baghaei stated that vessels should exercise caution as safe navigation cannot currently be guaranteed.

Earlier in the day, US Central Command said the Strait of Hormuz remained open. According to CENTCOM, secure shipping lanes have been established for commercial vessels passing through the strait, and all ships that do not violate sanctions and blockade measures against Iran are permitted to use them.

Iran: No Final Conclusion Reached on US-Iran Agreement

Baghaei said that reports regarding the proposed US-Iran agreement remain speculative and that Iran has not yet reached a final conclusion on the deal.

He added that US actions have further undermined security in the Strait of Hormuz. According to Baghaei, Qatar and Pakistan are actively playing mediating roles, but US actions have complicated diplomatic efforts.

He noted that Iran has been fully aware of the progress of negotiations from the outset and that most of the agreement text has already been completed. However, he accused Washington of repeatedly changing its position. Iran, he stressed, will not compromise on issues it considers "red lines."

Earlier, President Trump said he understood that Iran's Supreme Leader had approved the agreement and that all Iranian parties had endorsed it.

Israel Says Trump Promised Removal of Iran's Enriched Uranium

Late on June 11, the office of Israeli Prime Minister Benjamin Netanyahu said Netanyahu had spoken with US President Donald Trump regarding the memorandum of understanding currently being drafted to pave the way for further negotiations with Iran.

Although Israel is not a signatory to the memorandum, Netanyahu expressed appreciation for Trump's assurances that the final agreement would include the removal of Iran's enriched uranium, dismantling enrichment infrastructure, restrictions on missile production, and an end to Iranian support for regional proxy groups.

Trump Says US-Iran Agreement Nears Completion

On June 11, President Trump said an excellent agreement had been reached on Iran and that the documents had entered the final drafting stage. He said the agreement could be finalized and signed within days.

Trump added that the signing ceremony could take place in Europe as early as this weekend and that Vice President J.D. Vance would attend. He also said that once Iran signs the agreement, the Strait of Hormuz would reopen.

Iran has not yet responded to these remarks.

Israel Says It Has Not Been Informed of Any Finalized Agreement

According to Israeli media reports on June 11, a senior Israeli official said Israel had received no notification that a US-Iran agreement had been finalized.

The statement directly contradicted Trump's earlier remarks. Earlier in the day, Trump wrote on his Truth Social platform that discussions with Iran and the final terms had been approved by all relevant parties, including Israel.

ECB Raises Interest Rates by 25 Basis Points

The European Central Bank raised its deposit facility rate from 2.00% to 2.25%, its main refinancing rate from 2.15% to 2.40%, and its marginal lending facility rate from 2.40% to 2.65%.

The ECB said the conflict in the Middle East is creating inflationary pressures and that the latest policy decision leaves the Governing Council well positioned to deal with uncertainty arising from the conflict.

The central bank noted that inflation risks remain tilted to the upside, while economic growth faces downside risks. Future policy decisions will remain data-dependent and be assessed meeting by meeting.

The ECB also emphasized that the ultimate impact of the Middle East conflict on medium-term inflation and growth will depend on the size and duration of energy price shocks and their indirect and second-round effects.

The ECB lowered its growth forecasts for 2026 and 2027. It now expects inflation to reach 3.0% in 2026, compared with the previous forecast of 2.6%; inflation in 2027 is projected at 2.3%, up from 2.0%; and inflation in 2028 is expected at 2.0%, slightly below the previous estimate of 2.1%.

Yellen Sees No US Rate Hikes in the Near Term

Former US Treasury Secretary and former Federal Reserve Chair Janet Yellen said the United States is facing multiple supply shocks, including tariffs and rising energy and semiconductor prices, which could keep inflation above the Fed's target through the remainder of this year and next year, and potentially even until 2028 due to the AI investment boom.

However, given the uncertainty surrounding oil prices, Yellen believes the Fed is unlikely to raise interest rates in the coming months.

US May PPI Records Largest Annual Increase in Three and a Half Years

US producer prices for final demand rose 6.5% year-on-year in May, marking the largest increase since November 2022. On a monthly basis, PPI increased 1.1%, with both figures exceeding market expectations.

Core goods prices excluding food and energy rose 0.8%, the biggest increase since April 2022.

The data reinforced economists' expectations that the Federal Reserve may keep interest rates unchanged through 2027. At next week's policy meeting, the Fed could abandon its previously dovish forward guidance.

Today's Focus

14:45 (UTC+8) Final French May CPI (MoM)

15:00 (UTC+8) ECB Governing Council member Joachim Nagel speaks

16:00 (UTC+8) ECB Governing Council member Olli Rehn speaks

22:00 (UTC+8) Preliminary US June one-year inflation expectations

22:30 (UTC+8) ECB Governing Council member Joachim Nagel speaks again

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