ECB Hikes Interest Rates Amid Energy Price Pressures

The European Central Bank is expected to raise interest rates on Thursday due to ongoing energy price pressures and rising inflation. The move, which has been widely anticipated by markets, will be a quarter-point increase to 2.5%, according to traders.

Despite the rate hike, policymakers have little appetite to signal further increases, with many economists predicting that the room for further rises is limited due to concerns over economic growth and job market conditions.

Euro zone inflation rose back above 3% in August on higher energy costs, while business activity continues to post solid growth, according to S&P Global data. However, services inflation dropped despite the overall jump in price growth.

Commerzbank economist Marco Wagner noted that investors will be looking for comments from the ECB on indirect and second-round effects of energy prices on core inflation. There is a lot of uncertainty around this topic, he said.