ECB Set to Raise Rates Amid Iran War Fuel Price Fears
The European Central Bank is set to raise interest rates for the second time this year on Thursday, amid concerns about inflation driven by higher energy prices due to the ongoing conflict in Iran.
Economists expect the ECB to increase its key interest rate from 2.25% to 2.50%, with some signaling a readiness to take further action if the inflation outlook does not improve.
Alicia Berardi, head of global macroeconomics at Amundi Investment Institute, said that a September rate hike 'seems almost certain', citing high inflation and elevated energy prices as concerns.
The eurozone economy is performing better than expected, despite higher fuel costs, competition from China, and the effects of droughts. However, financial markets are pricing in two or three additional rate hikes by the end of next year.