ECB Seen Hiking Rates Amid Eurozone Inflation Surge
The European Central Bank (ECB) is widely expected to raise its key interest rate by at least 25 basis points on Thursday, according to CNBC Top News. The probability of this decision is seen as 100% by markets.
This move comes after the release of eurozone inflation data, which showed a rate of 3.3% in August, with energy price growth reaching 14.3%. This has exceeded the ECB's 2% target since the war in the Middle East threatened the transportation of commodities through the Strait of Hormuz.
The escalation of the conflict between the US and Iran has also caused a sharp rise in government borrowing costs, with yields on European government bonds reaching multi-decade highs. Investors are pricing in higher inflation and further rate increases.