Eurozone Interest Rates Set to Rise Again Amid Global Economic Uncertainty

The Eurozone economy is expected to receive another interest rate hike from the European Central Bank (ECB) on Thursday, as ECB President Christine Lagarde prepares to address the press. According to Andrew Kenningham, chief Europe economist at Capital Economics, the ECB governing council 'looks certain' to raise its deposit rate from 2.25 percent to 2.5 percent.

This move comes after a stronger-than-expected US jobs report showed 162K job additions in August, pushing Federal Reserve (Fed) rate-hike bets above 60%. Meanwhile, ongoing Middle East tensions between the US and Iran could drive flows into safe-haven assets such as the Greenback.

Analysts at Deutsche Bank highlight that investors will focus on any guidance regarding the likelihood of further tightening from the ECB. The bank's European economics team expects a 25bp rate increase, taking the deposit rate to 2.50%.