Economists agree: ECB to hike interest rates by 25 bps to 2.5% in September - Reuters

According to a Bloomberg poll, 57 out of 69 economists predict the European Central Bank (ECB) will increase its deposit rates by 25 basis points to 2.50% in September. This projection represents an improvement from the previous July poll, where only 49 of 74 economists expected such a rate hike. The ECB, based in Frankfurt, Germany, is the monetary authority responsible for setting interest rates and implementing monetary policy in the Eurozone.

The institution's main objective is to preserve price stability, which involves keeping inflation near a target of 2%. The ECB primarily achieves this goal by altering interest rates, with higher rates usually strengthening the Euro.

The ECB Governing Council, comprised of heads of national banks from Eurozone countries and six permanent members, including ECB President Christine Lagarde, convenes eight times annually to make monetary policy decisions. In exceptional circumstances, such as extreme economic situations, the ECB may employ Quantitative Easing (QE), a policy tool involving the printing of Euros and their purchase of assets like government or corporate bonds from financial institutions.

Conversely, when the economy recovers and inflation begins to rise, the ECB can engage in Quantitative Tightening (QT), which entails ceasing bond purchases and reinvestment of maturing bonds. QT typically has a positive impact on the Euro.