ECB Eyes More Rate Hikes Amid War-Fueled Inflation

European Central Bank (ECB) policymakers are anticipating further policy tightening in the months ahead to combat a war-driven surge in inflation. This could lead to another interest rate hike as soon as October, according to two sources familiar with the matter.

The ECB raised borrowing costs for the second time this year on Thursday and warned that price pressures may persist. Policymakers are growing increasingly concerned about inflation after recent sharp rises in gas and oil prices, which they believe could spread to other parts of the economy.

While an exact timeline is uncertain, sources suggest a move could occur at the ECB's next meeting on October 29, pending incoming data and developments in Iran. However, ECB President Christine Lagarde emphasized that decisions are made 'meeting-by-meeting' and 'data-dependent', leaving room for flexibility.