The European Central Bank will raise its deposit rate by a quarter-point to 2.50% on September 10, a Reuters poll of 65 economists shows. All respondents expect the move, but most see it as the ECB's last hike in what would be its shortest tightening campaign since 2011.
A short, sharp hiking cycle
Every one of the 65 economists surveyed between August 31 and September 3 expects the ECB to lift its deposit rate to 2.50% next week, up from 83% in an August poll and 72% before July's meeting, when the bank held rates. The ECB last raised rates in June.
If the poll proves right, this would match the ECB's shortest hiking campaign since 2011, when it raised rates twice to counter surging oil prices — moves many policymakers now view as a mistake.
Economists split from rate futures
About 91% of economists expect the deposit rate to end the year at 2.50%, and 78% see it holding there through mid-2027, while interest rate futures price in a third move. Carsten Brzeski, global head of macro at ING, said policymakers are unlikely to add pressure on a fragile economy given public finance strains and rising bond yields.
Pia Fromlet, euro area economist at SEB, expects the ECB to stop after September because inflation should approach target next year, though she added: "there is an upside risk to our inflation forecast."
Inflation pressure and geopolitical risk
Euro zone inflation accelerated to 3.3% in August, driven largely by energy costs, reinforcing the case for a hike. Economists raised their 2026 inflation forecast six times this year to 2.9%, the sharpest run of upward revisions since 2022.
Forecasts for the current and next quarter were revised up to 3.2% and 3.3%, and inflation isn't expected to hit the ECB's 2% target until late 2027. War in the Middle East has intensified in recent days, and Alain Durre, chief Europe economist at Natixis, warned that persistently high diesel, gasoline and food prices could push short-term consumer inflation expectations higher and raise the risk of wage slippage.
The euro zone economy is forecast to grow 0.8% this year and 1.2% in 2027.
Source: Investing.com
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