ECB Prepares Second Rate Hike of 2026 Amid Persistent Eurozone Inflation

The European Central Bank (ECB) is preparing to raise interest rates for the second time in 2026, with markets expecting a 100% probability of a 25 basis point hike that would push the deposit facility rate to 2.50%. This move is set to occur around September 10, as eurozone inflation continues to run above the ECB's 2% target.

The main culprit behind this stubbornly high inflation is energy prices, with Brent crude surging to nearly $100 per barrel due to geopolitical tensions tied to the US-Israeli conflict involving Iran.

ECB President Christine Lagarde has framed these rate increases as necessary responses to persistent price pressures, although analysts have taken to calling them 'insurance hikes.'