ECB seen raising rates in September as eurozone inflation holds at 2.9%
This digest was compiled by AI from multiple sources — links to the originals are below.
The European Central Bank is expected to raise interest rates at its September 10 meeting, with analysts seeing a high probability of a hike. Eurozone inflation at 2.9% and energy price volatility are pushing policymakers toward further tightening. The move would follow a June increase and a July pause.
Key Facts
- The ECB's next rate decision is scheduled for September 10.
- Eurozone inflation stands at 2.9%, above the ECB's 2% medium-term target.
- Some Governing Council members favor raising the deposit rate from 2.25% to 2.50%.
- Eurozone GDP grew 0.4% quarter-on-quarter in Q2 2026, the strongest in 1.5 years.
- Germany's economy expanded 0.3% in Q2, with annual growth revised to 1%.
Rate Hike Expectations
Analysts assess a high probability that the ECB will continue tightening at its September 10 meeting. The bank raised rates in June for the first time in nearly three years, then paused in July. Some Governing Council members believe the deposit rate should rise from 2.25% to 2.50% to control war-related economic side effects. Officials aim to show resolve in preventing a repeat of the sharp inflation wave that followed Russia's 2022 invasion of Ukraine. Financial markets are pricing in one or two additional rate hikes by year-end.
Growth Data
Eurostat and Destatis released data showing the eurozone economy grew 0.4% quarter-on-quarter in Q2 2026, the strongest performance in 1.5 years. Annual growth for the eurozone reached 1%, supported by AI investments and strong public spending. Germany, Europe's largest economy, grew 0.3% in Q2, above preliminary estimates, driven by a marked export recovery. Germany's annual growth rate was revised to 1%. This economic resilience eases recession concerns and gives the ECB room for tighter policy.
Inflation Risks
The ECB's July meeting minutes noted that downside risks to growth have diminished and confidence indicators have recovered. Inflation risks remain tilted to the upside, with natural gas and fuel price increases posing the greatest threat to the energy-importing eurozone. The minutes warned that the risk of gas prices creating an inflationary shock similar to 2022 must be considered.
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ECB seen raising rates in September as eurozone inflation holds at 2.9%
