The European Central Bank is expected to raise its deposit rate by 25 basis points to 2.50% at its September 10 policy meeting, according to a Reuters poll of 65 economists conducted between August 31 and September 3. The move would represent the ECB’s second hike in its shortest tightening cycle in 15 years, following a pause in July after a June increase.
All surveyed economists forecast the deposit rate will reach 2.50% next week, up from 83% in an August poll and 72% before the July meeting. Nearly 91% of respondents expect the rate to remain at 2.50% through the end of 2024, while 78% foresee no change through mid-2025. Interest rate futures, however, imply a third hike, diverging from the economists’ outlook.
Euro zone inflation accelerated to 3.3% in August, remaining above the ECB’s 2% target amid rising energy costs. Economists raised their 2026 inflation forecast for the sixth time this year to 2.9%, the largest upward revision in a year since 2022. Quarterly inflation projections were also lifted to 3.2% for the current quarter and 3.3% for the next, up from 3.0% and 3.2% previously. Inflation is not projected to return to target until late 2027.
Economic growth forecasts were trimmed slightly, with the euro area expected to expand 0.8% this year and 1.2% in 2027. Analysts cited persistent geopolitical risks, including tensions in the Middle East and Ukraine, as factors contributing to energy and food price pressures that could further complicate the inflation outlook.
ING’s global head of macro, Carsten Brzeski, noted the ECB faces limited scope for additional tightening given concerns over public finances and rising bond yields. "We still find it hard to see, amid public finance woes and surging bond yields, that the ECB would really be willing to add more fuel to the fire," he said. SEB’s euro area economist, Pia Fromlet, added that inflation is expected to approach target next year, reducing the need for further hikes. "When it comes to beyond September, the reason why they will stop hiking is we still think inflation will approach target during the course of next year," she said.
Natixis’ chief Europe economist, Alain Durre, highlighted the risk of entrenched inflation from elevated diesel, gasoline, and food prices, warning that sustained pressure could lift near-term consumer inflation expectations and trigger wage increases.
