ECB Set to Hike Rates Amid Soaring Energy Prices and Inflation Fears

The European Central Bank (ECB) is preparing to raise interest rates on Thursday as rising energy prices threaten to push eurozone inflation higher.

The ECB's key deposit rate is expected to increase by 25 basis points to 2.5%, its second rate hike this year, following a surge in oil and gas prices due to the ongoing Middle East conflict.

Eurozone inflation climbed to 3.3% in August, well above the central bank's 2% target, with energy costs rising sharply since fighting between the US and Iran intensified.

The rise in energy costs has renewed concerns about inflation across the 21-nation eurozone, which relies heavily on imported energy, but economists note that recent economic data has given policymakers some room to tighten policy without immediately weakening the economy.