ECB Rates May Soar to 3% as Energy Risks Intensify Inflation Concerns

Investors are increasingly pricing in a more hawkish policy stance from the European Central Bank (ECB) due to growing energy risks and inflation concerns. According to market expectations, the ECB may raise rates again in September, with some predicting that the deposit rate could approach 3% by the end of 2027.

The potential shortage of refined petroleum products, low gas inventories in the eurozone, and ongoing geopolitical tensions are contributing to rising energy prices and inflationary pressures. Despite a recent decline in oil prices, traders expect ECB rates to rise, even if energy costs stabilize or fall further.

Market participants believe that the war could have a lasting impact on the energy market, keeping inflation elevated. The crack spread, which measures the difference between petroleum product values and crude oil, is expected to remain high due to tight refined product markets.