ECB Hike 'All But Certain' Amid Inflation and Iran Uncertainty

The European Central Bank (ECB) is widely expected to raise its key interest rate on Thursday, September 10th. Markets are pricing in a 100% chance of the ECB increasing its rate by at least 25 basis points, according to LSEG data.

The decision comes as the eurozone inflation rate hit 3.3% in August, with energy prices spiking to 14.3%. The central bank is facing rising prices, the consequences of the U.S.-Iran war, and surging government borrowing costs.

While a rate hike is 'all but certain', investors are divided on what comes next. The uncertainty surrounding the U.S.-Iran conflict is casting a shadow over the ECB's longer-term policy path.