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The European Central Bank is widely expected to raise interest rates again on September 10, taking its deposit rate to 2.50%. The decision itself is hardly controversial: all 65 economists surveyed by Reuters between August 31 and September 3 predicted a 25-basis-point increase.
The European Central Bank is widely expected to hike interest rates on Thursday, erring on the side of caution as the U.S.-Iran wardrags on, keeping oil prices high and raising inflation again.
Focus in the coming week will center firmly on U.S. inflation data as investors gauge whether the Federal Reserve could raise interest rates in the coming months, and possibly as early as this month.
Economists think the European Central Bank will raise interest rates next week but not beyond that. The majority of respondents in a Bloomberg survey expect the deposit rate to be raised by a quarter-point to 2.5% on Thursday and stay there through 2027.
The spike in euro zone inflation since the start of the war in Iran has almost entirely been driven by higher energy prices, justifying the European Central Bank's small increase in interest rates in June, new ECB research showed on Tuesday.
European Central Bank policymakers meeting last month saw another interest rate increase as likely needed to bring inflation back down to 2%, the ECB's account of the meeting showed on Thursday.
European shares are expected to post only modest gains by the end of the year, a Reuters poll found, as geopolitical risks temper optimism from strong corporate earnings.
European Central Bank board member Isabel Schnabel said interest rates must rise further as the conflict in the Middle East drags on and strong euro-zone economy pose upside risks to inflation, in an interview to Bloomberg News published on Wednesday.