The European Central Bank will raise its deposit facility rate to 2.50% in September 2026, marking its second rate hike of the year, with markets pricing in a 100% probability of this move. Euro-area inflation stood at 3.0% in August 2026, a full percentage point above the ECB’s 2% target, with the ECB projecting headline inflation to average 3.0% for all of 2026. Brent crude has surged to nearly $100 per barrel, driven by geopolitical tensions tied to the US-Israeli conflict involving Iran. Markets largely expect the September hike to be the last increase for the year, as the ECB is unlikely to cut rates until inflation shows a convincing trajectory back to 2%.
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