The European Central Bank is expected to announce an interest rate hike on Thursday, with markets pricing in a 100% probability. Inflation in the eurozone reached 3.3% in August, while energy inflation surged to 14.3% due to the U.S.-Iran conflict threatening commodity transit through the Strait of Hormuz and keeping oil prices volatile. The ECB raised rates in June to 2.25%, its first increase since 2023, but remains divided on the continuation of its tightening cycle. A Deutsche Bank survey reveals no investor consensus: expectations range from one additional rate hike to three hikes, with the terminal rate estimated between 2.75% and 3%.
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