ECB Set for Second Rate Hike as Iran War Fuels Inflation Fears
The European Central Bank (ECB) is poised to raise interest rates for the second time in 2026, as inflation concerns surge due to the ongoing Iran war. Economists expect the ECB to increase its policy rate to 2.50 per cent from 2.25 per cent on September 10.
The Iran conflict has led to a sharp rise in oil and gas prices, sparking fresh fears of price hikes in the fuel-importing euro zone. Core inflation, which strips out energy and food prices, eased to 2.4 per cent in August, but analysts warn that inflationary pressure is building beneath the surface.
Resilient economic growth has provided some comfort for ECB president Christine Lagarde and her colleagues, who are likely to take a hawkish wait-and-see stance during their upcoming meeting. However, the burden of proof lies with the data, and analysts caution that inflation could rise further if energy prices remain high.