ECB Rate Hike Looms as Euro Area Inflation Surges to 3.3%

The European Central Bank (ECB) is likely to raise interest rates next week after euro area inflation surged to 3.3% in August, driven by higher energy costs.

The increase from 2.9% in July was largely due to rising oil and gas prices, according to data from Eurostat, the EU's statistical agency.

This development is consistent with the ECB's own expectations, suggesting a widely anticipated hike in the deposit rate to 2.5% will be a relatively easy decision.

The core inflation rate, which excludes volatile food and fuel prices, eased slightly to 2.4%, while underlying price pressures remained modest.

Financial markets expect two more rate hikes in the next year as higher energy prices eventually seep into broader price setting.