Eurozone Rate-Setters Anticipate Second Interest Rate Hike This Year

The European Central Bank is expected to raise interest rates for the second time this year on Thursday in response to rising energy prices. The move aims to combat inflation, which hit a three-year high of 3.3 percent in August.

International oil benchmark Brent has jumped above $100 a barrel, while European gas prices have surged to their highest levels since early 2023, topping 80 euros ($93) per megawatt hour. This follows an escalation in the US-Iran conflict and attacks by Iran-backed Houthi rebels on Saudi oil facilities.

A hike of 25 basis points is highly likely, according to Dirk Schumacher, chief economist at German public lender KfW. This would take the ECB's key deposit rate to 2.5 percent, a level last seen in March 2025.