European Central Bank expected to hike interest rates to 2.5 percent

The European Central Bank (ECB) is expected to raise its main deposit interest rate by 25 basis points to 2.5% during its meeting this coming Thursday. This move follows an initial hike implemented in June and is largely viewed as a response to rising inflation, which reached 3.3% in August, alongside the ongoing geopolitical crisis between the United States and Iran that has caused fuel prices to surge.

Financial markets have largely anticipated this decision, as reflected in the upward trajectory of Euribor rates, which directly impact the cost of variable-rate loans. The three-month Euribor has risen to 2.65%, up from 2.46% in early August and 2.31% in July, while the one-month Euribor has climbed to 2.30%. ECB Executive Board member Isabel Schnabel has signaled that inflation is likely to remain above the bank's 2% target for an extended period, citing the impact of the conflict near the Strait of Hormuz on energy costs.

Analysts emphasize that the bank is unlikely to delay further tightening, drawing on experience from the 2022-2023 period when the institution implemented ten consecutive rate hikes. The decision continues a restrictive monetary policy aimed at stabilizing the eurozone economy amidst persistent external economic pressures.