ECB Rate Hike Expectations Strengthen Amid Persistent Inflation

Market expectations for another interest rate hike by the European Central Bank (ECB) have strengthened, according to Deutsche Bank, Natixis, and Crédit Agricole.

The three banks expect persistent inflation and higher energy prices to keep the ECB on course for another increase in September, with some policymakers already debating whether to raise rates immediately.

Deutsche Bank believes that a hike in September is now 'more or less a done deal', while Natixis and Crédit Agricole expect July inflation to remain stubbornly elevated due to renewed energy price pressures.

The ECB left interest rates unchanged at its July meeting, but the banks argue that the Governing Council has effectively signalled that another increase is likely unless inflation pressures ease sharply.