The European Central Bank is preparing for its second interest rate hike of 2026, with markets anticipating a 25 basis point increase around September 10. This adjustment will bring the deposit facility rate to 2.50%.
The decision follows persistent inflation in the eurozone, which reached 3.0% in August 2026, exceeding the ECB's 2% target. Projections indicate that average inflation for the year will remain at 3.0%, largely driven by energy costs.
Rising energy prices, specifically Brent crude reaching nearly $100 per barrel, are attributed to geopolitical tensions involving the US, Israel, and Iran. The ECB previously raised rates by 25 basis points on June 11, 2026, to 2.25%.
The central bank currently follows a data-dependent policy without providing forward guidance. Market participants expect the September move to be the final rate increase for the year, as the ECB plans to pause and evaluate economic conditions.