ECB Interest Rate Hike Unlikely in September as Eurozone Inflation Remains Steady

The European Central Bank (ECB) will likely keep its interest rates unchanged in September, according to Continuum Economics. The organization's analysis is based on recent inflation data from the eurozone, which showed a headline annual inflation rate of 2.9% in July, driven by energy prices.

However, core inflation remained steady at 2.5%, and consumer price index (CPI) ex-energy was unchanged at 2.2%. Service inflation edged up to 3.3%, but Continuum Economics believes that wage trends will continue to be a key factor in determining inflationary pressures.

The organization notes that negotiated wage settlements out to Q1 2027 remain steady, with an average of 2.7% increases. This is consistent with a 2% inflation target being achieved into 2027, assuming energy prices decrease somewhat, which is still the baseline scenario.