ECB Set to Hike Interest Rates Again Amidst Divided Council

The European Central Bank (ECB) is set to raise interest rates for the second time since the Iran war, as inflation continues to soar. The deposit rate will increase by a quarter-point to 2.5% on Thursday, according to a Bloomberg poll of analysts.

The ECB has been battling consumer-price gains that breached 3% last month, an almost three-year high that's unlikely to recede soon. Analysts see two or more additional hikes, while economists are skeptical. ECB officials are divided, with some urging caution in the absence of second-round inflation effects and lingering risks from the Middle East and US trade.

The policy announcement is due at 2:45 pm in Berlin, where President Christine Lagarde will face journalists later that day. The meeting marks a rare occasion when the ECB holds its gathering outside Frankfurt. Lagarde's future has been questioned amidst speculation about her potential role in French politics and her possible departure from the ECB early.

The ECB's decision to hike interest rates comes as it faces pressure to curb inflation, which is locked well above target. The central bank has widely telegraphed September's rate increase, but divisions have emerged over what follows. Some officials argue that hiking to 2.5% won't be enough to return inflation to 2%, citing firmer growth and other factors.