ECB Prepares for September Rate Hike Amid Inflation Concerns
The European Central Bank (ECB) is preparing to raise interest rates at its September meeting to combat inflation and mitigate the effects of the ongoing Iran conflict, according to sources.
The ECB raised borrowing costs for the first time in nearly three years in June to prevent a war-fuelled rise in energy prices from spreading too widely in the economy. With inflation at 2.99%, policymakers believe it is time to increase the policy rate again, this time to 2.50% from 2.25%.
The decision is seen as a signal of resolve to avoid a repeat of the brutal bout of inflation that followed Russia's invasion of Ukraine in 2022, where rising natural gas prices and high petrol costs drove up prices.
The euro zone economy is showing signs of resilience, with output data and business surveys indicating that the ECB's efforts to rein in price hikes are not putting undue strain on activity.