ECB Hike Looms as Oil Prices Surge Above $100

The European Central Bank (ECB) is expected to hike interest rates for a second time this year, taking the deposit rate to 2.5% from 2.25%. The move comes as inflation in the eurozone reached 3.3% in August, with energy inflation surging 14.3%. Oil prices have also continued to rise, surpassing $100 a barrel.

The ECB's decision will be closely watched for any clues on future rate hikes. Upward revisions to growth and inflation forecasts could indicate additional increases. However, there is limited evidence that the energy shock has generated a widespread second-round effect.

The market sees potential for two more rate hikes before Q3 next year. A hawkish tone from the ECB could weigh on European equities, particularly as elevated bond yields are already tightening financial conditions.