ECB Rate Hikes Gain Momentum as Energy Prices Soar

The European Central Bank's (ECB) recent decision to raise interest rates by 25 basis points has strengthened expectations of further rate hikes in response to ongoing inflation concerns.

Rising energy prices, with crude oil above $100 per barrel due to renewed hostilities between the US and Iran, have worsened the inflation outlook for the euro zone.

Major banks such as Goldman Sachs, Citigroup, and Barclays expect the ECB to raise rates again in December, with some anticipating an additional hike in March 2027. Citi economists warn that prolonged high inflation poses risks of it becoming self-sustaining.