Middle East conflict boosts inflation, ECB may “stand still” until final interest rate hike in December

The Zhitong Finance App learned that the economists surveyed said that the ECB will wait until December to raise interest rates for the last time to curb inflation caused by the Middle East conflict.

The economists surveyed expect that the ECB Governing Council will raise deposit interest rates to 2.75% at the last meeting of this year, thus skipping the next chance to raise interest rates at the end of October. In the last round of surveys, analysts predicted that the 25 basis point rate hike in September would be the end of the current cycle.

The ECB may raise interest rates for the last time in December

Market expectations have changed in recent weeks as oil and gas prices have jumped. The ECB also raised its inflation forecast last week, which supports the prediction that “further policy tightening is needed to achieve the 2% target”. Investors are betting on at least three more rate hikes.

According to people familiar with the matter, officials are also expecting further policy tightening, but they have yet to form a clear opinion on whether and when to raise interest rates. Bank of Ireland official Gabriel Makhlouf told Bloomberg TV on Thursday that in a time of uncertainty, “every meeting is a meeting where action is possible”.

Economists surveyed by Bloomberg predict that interest rates will remain at 2.75% until December 2027, when the ECB will not start cutting interest rates.