European Central Bank to resume interest rate hikes in September as inflation, energy risks rise
The European Central Bank (ECB) is expected to raise the interest rate on the Main Refinancing Operations and the Deposit Facility by 25 basis points (bps) to 2.65% and 2.50%, respectively. The ECB will announce the decision on Thursday at 12:15 GMT.
The European Central Bank (ECB) plans to increase interest rates by 25 basis points in September to 2.65% for the Main Refinancing Operations and 2.50% for the Deposit Facility. This decision will be disclosed on Thursday at 12:15 GMT, alongside updated economic projections and followed by ECB President Christine Lagarde's press conference at 12:45 GMT.
The Euro (EUR) is anticipated to experience heightened volatility due to the policy announcement. The ECB is resuming rate hikes after pausing in July, driven by rising energy prices, geopolitical tensions in the Middle East, and a 3.3% increase in the Eurozone's HICP inflation to a three-year high. Despite some economic growth, the ECB's 2% inflation target remains a concern.
Market expectations are high for any hints of further rate hikes and revisions to inflation forecasts during Lagarde's speech. Analysts suggest the ECB's rate hike decision will likely support the Euro, pushing EUR/USD back above 1.1700 if a hawkish tone and upward inflation revisions are reported.
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