ECB Rate Hikes Gain Momentum Amid Rising Energy Prices

The European Central Bank's (ECB) decision to raise policy rates by 25 basis points has prompted calls for further rate hikes as inflation remains a concern.

Goldman Sachs, Citigroup, and Barclays are forecasting additional rate increases from the ECB in response to rising energy prices and renewed hostilities between the US and Iran that have pushed crude prices above $100 a barrel.

The Middle East conflict has worsened the eurozone's inflation and growth outlook, with Goldman Sachs stating that a December rate hike would push rates into 'mildly restrictive territory'. Citi expects an additional hike in March 2027, citing the risk of inflation becoming endogenous if it remains high for too long.

The ECB has raised borrowing costs aggressively over the past several years to curb inflation, but officials have stressed that policy decisions will remain data-dependent.