Euro-zone inflation reached 3.3% in August, up from 2.9% in July, driven primarily by energy prices amid the ongoing Iran conflict. Gediminas Simkus, a member of the ECB’s Governing Council, has stated that the widely expected 25 basis-point rate hike in September will be insufficient to tame inflation. The deposit facility rate is set to climb to 2.50%, following a first increase to 2.25% in June. ECB staff projections forecast inflation at 3.0% for 2026, falling to 2.3% in 2027 and reaching the 2.0% target in 2028.
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