ECB officials expect rate hikes, next one possible next month - Bloomberg

Investing.com -- European Central Bank officials expect to raise interest rates further to contain persistent inflation, with another hike possible as soon as next month, Bloomberg News reported, citing people familiar with the situation. While policymakers stress that their decisions will continue to hinge on incoming economic data, tighter monetary policy may be required to control inflation that remains stuck above 3%. However, the sources told Bloomberg that aggressive market wagers for three additional hikes may go too far, adding that December could prove a more appropriate time to lift borrowing costs alongside fresh forecasts extending into 2029. An ECB spokesperson declined to comment on the discussions.

The discussions come after the central bank delivered its second rate increase since the outbreak of war in Iran. Central bankers are attempting to contain severe energy disruptions that have driven consumer prices to three-year highs.

Spurred by surging crude prices and higher central bank projections for growth and inflation, financial markets have priced in a total of 75 basis points of tightening by mid-2027.

ECB President Christine Lagarde brushed off short-term market fluctuations, emphasizing that the bank remains focused on ensuring price stability.

Lagarde cautioned that rising energy expenses will eventually spill over into core consumer categories and food prices. Pointing to escalations in the Middle East alongside the war in Ukraine, she warned that elevated energy costs will likely keep headline inflation above the bank’s official target into early 2027.

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