ECB Rate Hike Predicted Amidst Ongoing Inflation Pressures

Barclays predicts that the European Central Bank (ECB) will raise interest rates by another 25 basis points in December, amidst persistent inflationary pressures and surging energy prices. The forecast comes after the ECB raised its benchmark interest rate by 25 basis points on Thursday.

The central bank's updated projections show that inflation is likely to remain above its 2% target for longer, with a 93.9% probability of another rate hike in December, according to LSEG data. Goldman Sachs also forecasts a 25-basis-point rate hike in December, which would push the ECB's interest rate into slightly restrictive territory.

The conflict between the US and Iran has driven oil prices back above $100 per barrel, raising concerns about imported inflation in the eurozone. Barclays notes that the ECB's baseline forecast indicates that inflation will not return to its 2% target until the end of 2027.