ECB Seen Hiking Rates Again as Inflation Pressures Persist

Analysts at Nordea believe the European Central Bank (ECB) is increasingly likely to raise interest rates at its September meeting. According to their assessment, underlying inflation has been slow to cool, while negotiated wage growth remains above levels consistent with the ECB's 2% target.

The view adds weight to the hawkish camp, suggesting that the ECB's 'data-dependent' approach may soon tip toward action. A September hike would bring the ECB's deposit rate to 4.00%, the highest level since the euro was introduced.

Markets have been wavering on the likelihood of another hike, with investors pricing in a roughly 60% chance of a 25-basis-point increase at the September 14 meeting, according to Refinitiv data. A confirmed hike could push euro-area government bond yields higher, affecting everything from mortgage rates to corporate financing conditions.