ECB Expected to Raise Rates Amid Rising Energy-Driven Inflation Fears

The European Central Bank is expected to raise interest rates by 25 basis points at its meeting in Frankfurt, bringing the benchmark deposit facility rate up to 2.50%. This decision has kept borrowing costs tightly anchored across the continent.

Germany's policy-sensitive two-year Schatz yield hovered near 3.037%, remaining close to its highest levels in two years. The benchmark German 10-year Bund yield held firm at 3.432%, lingering just below its 15-year high touched earlier in the week.

The energy-driven inflation risks have cemented bets on further monetary tightening, with Eurozone inflation picking up to 3.3% in August, propelled by a 14.3% jump in energy components.

Investors will parse President Lagarde's commentary to determine whether the September move represents a standalone adjustment or the opening salvo of a longer autumn tightening cycle.