Eurozone Growth and Inflation Spur ECB Rate Hike Bets

The European Central Bank's potential for another interest rate hike this year gained momentum as Germany's 10-year Bund yield held above 3.15%. Stronger-than-expected eurozone growth and firmer inflation in key countries supported this expectation.

According to recent data, the eurozone economy expanded by 0.4% in the second quarter, surpassing forecasts of 0.2% and marking its strongest growth since early 2025. Spain led with 0.7% growth, while Germany, France, and Italy each expanded 0.2%, and the Netherlands grew 0.4%.

Higher inflation readings in Germany and Spain further reinforced the case for additional ECB tightening. This scenario could unfold as soon as September, if current trends persist.