ECB Rate Hike in September Now Seen as Near-Certain

Market expectations are pointing towards a near-certain rate hike by the European Central Bank (ECB) in September, according to asset managers and economists.

Konstantin Veit, Portfolio Manager at PIMCO, is confident that the ECB will raise the deposit rate (DFR) by 25 basis points to 2.5% this month, followed by a prolonged pause.

Florian Spaete, Senior Fixed Income Strategist at Generali AM, agrees that markets are fully pricing in a 25-basis-point hike in September and almost two more by summer 2027.

The views diverge on how much further the tightening cycle has to run, with Josep Soler, Founder and Executive Advisor of EFPA España, expecting one or two rate hikes before year-end or even a single 50-basis-point hike instead of 25 basis points.