ECB Prepares to Raise Rates Amid Energy Price Fears

The European Central Bank (ECB) is set to raise interest rates on Thursday as policymakers weigh renewed inflation risks against signs of resilience in the eurozone economy. Energy prices have surged, pushing eurozone inflation back above 3% in August.

Markets are already pricing in a quarter-point rate increase, which would take the deposit rate to 2.5%. The expected hike comes after inflation accelerated due to higher energy costs, and policymakers want to prevent this shock from feeding into broader inflation expectations.

The outlook beyond September is far less certain, with ECB policymakers unlikely to commit themselves to a series of additional rate increases. Economists polled by Reuters largely expect the central bank to stop tightening after this month's expected hike.