ECB Set for Second Rate Hike Amid Iran War Fuelled Inflation

The European Central Bank (ECB) is set to raise interest rates for the second time since the Iran war sent energy prices soaring. The deposit rate will be lifted by a quarter-point to 2.5%, according to all but one analyst in a Bloomberg poll.

New quarterly forecasts will bolster the case for action, pointing to stronger inflation pressure alongside faster growth in the 21-nation eurozone. Policymakers are battling consumer-price gains that breached 3% last month, an almost three-year high that's unlikely to recede much in the months ahead.

The ECB increased rates in June and there's little disagreement over another move, but markets see two or more additional hikes while economists are sceptical. ECB officials are divided too, with some saying rates may need to rise further after this month, while others urge caution in the absence of second-round inflation effects and lingering risks from the Middle East and US trade.