ECB Set for More Rate Hikes Amid Inflation Fears Fuelled by Oil Price Surge

The European Central Bank (ECB) is poised to raise interest rates further amid concerns over inflation, according to Wall Street banks including Goldman Sachs and Citigroup.

In a recent policy decision, the ECB raised interest rates by 25 basis points, citing that inflation will remain above the 2% target for an extended period.

The escalation of tensions between the US and Iran has driven crude oil prices above $100 per barrel, exacerbating inflation predictions for the euro zone.

Citi economists warn that prolonged high inflation raises the risk of it becoming entrenched, while UBS expects a December rate hike by the ECB with a potential reversal leading to a 2.5% rate by late 2027.