ECB Poised for Second Rate Hike as Energy Prices Continue to Soar

The European Central Bank (ECB) is set to hike interest rates for the second time this year due to ongoing inflationary pressures, primarily driven by energy prices. Oil prices have surged past $100 a barrel amid the Middle East conflict, while natural gas prices in Europe have reached levels higher than those seen in 2023.

The eurozone's annual inflation rate rose to its highest level in three years at 3.3% in August, largely due to the rapid increase in energy costs. Peter Vanden Houte, chief economist at ING Group, expects the ECB to raise its deposit rate by 25 basis points to 2.5%, citing the eurozone economy's resilience and high energy prices.

Houte noted that core and services inflation have not yet signaled broader concerns, as the ongoing pressures remain largely energy-driven, which could prevent the ECB from adopting an overly hawkish stance at its upcoming conference. He added that the bank might adopt a wait-and-see approach after this month's rate hike.