ECB Set to Raise Rates Again Amid Eurozone Inflation Surge

The European Central Bank is set to raise interest rates for the second time this year as inflation surges in the eurozone. Inflation hit a three-year high of 3.3 percent in August, above the ECB's two-percent target.

The increase in energy costs due to renewed fighting in the Middle East has pushed up oil prices, which is heavily impacting the eurozone economy that relies on imports. The ECB's governing council looks certain to raise its deposit rate from 2.25 percent to 2.5 percent this week, according to Andrew Kenningham, chief Europe economist at Capital Economics.

Despite some economists warning that a rate hike may not be the right decision, given the nearly exclusive driver of inflation is energy costs and little sign of it seeping into other areas, most analysts expect the ECB to pause its hikes after this week's meeting. The eurozone economy has proven resilient, growing faster than expected in the second quarter.