ECB Set for Second Interest Rate Hike This Year Amid Iran War-Driven Inflation

The European Central Bank is set to raise its deposit rate by 25 basis points to 2.5% on Thursday, according to most analysts.

This will be the second increase in interest rates this year, following a hike to 2.25% in June and no change at the July meeting.

The decision is in response to inflation pressures caused by the ongoing Iran war, which has driven up energy prices and kept eurozone inflation elevated.

In June, the ECB projected that headline inflation would average 3.0% in 2026, 2.3% in 2027, and 2.0% in 2028, with growth of 0.8%, 1.2%, and 1.5%, respectively.