The European Central Bank is widely expected to raise interest rates on Sept. 10, marking what economists see as the second and final increase in its shortest tightening cycle in 15 years, according to a Reuters poll.
Inflation Pressure Persists, But The Case For More Tightening Is Limited
A Reuters survey conducted from Aug. 31 to Sept. 3 found that most economists do not expect higher energy prices to create broader inflationary pressure, despite the renewed escalation of the war in the Middle East. That view has tempered expectations for a more aggressive policy response.
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ECB watchers also expect policymakers to avoid adding pressure to an already fragile eurozone economy, even as global bond yields have risen sharply in recent days.
Energy Costs Lift Inflation, But Not The Outlook For A Third Hike
Eurozone inflation accelerated to 3.3% in August, moving further above the ECB’s 2% target. Energy costs were the main driver, strengthening the case for another rate increase, but most economists said the latest data did not warrant a third hike.
That assessment differs from interest-rate futures markets, which are pricing in another increase.
Strong Consensus Points To A Quarter-Point Increase
All 65 economists surveyed by Reuters expect the ECB to raise its deposit rate by 25 basis points to 2.50%. That represents a stronger consensus than in the August poll, when 83% expected a September increase, and ahead of the July meeting, when 72% predicted a move.
The ECB left rates unchanged in July, while its most recent increase came in June.
Markets See A Pause After September
Around 91% of economists expect the deposit rate to end the year at 2.50%, while 78% believe it will remain there through the middle of next year.
Those expectations have held despite the more difficult geopolitical backdrop and sharply higher borrowing costs across global bond markets. Most economists appear to view the recent inflation increase as largely energy-driven and therefore unlikely to develop into persistent, broad-based price pressure requiring prolonged monetary restraint.
If the ECB raises rates as expected in September, most economists surveyed by Reuters believe the move will mark the end of the central bank’s latest tightening cycle.







