European Central Bank raises interest rates a quarter point to quell energy-fueled inflation

European Central Bank (ECB) economists anticipate a higher interest rate hike from the ECB, driven by surging oil and natural gas prices. Deutsche Bank's European economists expect modest GDP growth revisions for 2026 and 2027, along with elevated inflation rates for 2027 and 2028. However, the ECB is projected to maintain a data-dependent approach without formal guidance during the meeting.

The latest policy decision from the ECB is scheduled for 13:15 London time, where markets anticipate a 25 basis points rate increase, bringing the deposit rate to 2.5%. In addition to the rate hike, the ECB's economists predict small upward revisions to GDP projections for 2026 and 2027, alongside higher headline inflation for 2027 and 2028.

Yet, the ECB is expected to refrain from providing formal guidance, adhering to its "data-dependent, meeting by meeting, no precommitment" mantra.