ECB Set for Another Rate Hike as Energy Prices Keep Inflation High

The European Central Bank (ECB) is expected to raise interest rates once more next month as high energy prices push inflation further from its 2% target, according to a Reuters poll. The poll of 69 economists found that 83% of respondents expect the ECB to increase its deposit rate by a quarter point to 2.50% in September.

This would mark the second consecutive rate hike and keep policy unchanged through at least the middle of 2027, making it the ECB's shortest tightening cycle since 2011 when it raised rates twice in response to an energy-price shock.

Economists have revised their inflation forecasts upwards, with median predictions for the final two quarters of this year rising 20 basis points to 3.0% and 3.2%. Inflation is not expected to return to the ECB's target until the third quarter of 2027.