ECB Set to Raise Interest Rates as Inflation Remains Elevated

The European Central Bank (ECB) is expected to raise interest rates on Thursday for the second time this year, driven by surging energy prices due to the ongoing US-Iran conflict.

Alessia Berardi, head of global macroeconomics at the Amundi Investment Institute, said 'A September hike looks all but locked in' as inflation remains elevated and should stay sticky over the next few months before easing toward the second half of next year.

The US PPI inflation data on Thursday will be closely monitored for more clues about the US interest rate path. The headline PPI is expected to show a rise of 5.3% YoY in August, versus 4.7% prior, while the core PPI is projected to show an increase of 4.6% in August, compared to 4.2% in July.