ECB Set to Hike Rates Amid Energy-Linked Risks

Nomura's Euro area team predicts that the European Central Bank (ECB) will raise interest rates by 25 basis points to 2.50% at its meeting on September 10.

This decision is based on higher HICP inflation, driven in part by the Iran war, and resilient economic growth in the euro area.

ECB officials have been making hawkish comments, with one official suggesting that the neutral interest rate is 'probably around 2.50%.'

The price of Brent crude oil and Dutch TTF natural gas are key factors influencing market expectations for future ECB rate hikes, which could occur as late as December 2026.