ECB Rate Hike Forecasted Despite Ongoing Iran War

Nomura strategists believe that the European Central Bank (ECB) will raise the deposit rate by 25 basis points to 2.50% in September, despite the ongoing Iran war.

The economists point out that euro area GDP excluding Ireland has been growing around its potential, with a quarterly growth rate of 0.3%, since the first quarter of 2026.

They expect the Harmonised Indices of Consumer Prices (HICP) inflation to remain at 2.8% and argue that the ECB can take comfort in the euro area's economic resilience.

The path for monetary policy beyond September will depend on the duration and severity of the Iran war, according to Nomura.