Why did the ECB raise interest rates again, and what is the primary driver of current inflation in the eurozone?

The ECB raised interest rates for the second time this year 'hoping to tame an inflation rise driven entirely by higher energy costs from the Iran war.' The news explicitly states that the inflation surge is not broad-based but rather 'driven entirely by higher energy costs' linked to the conflict, with oil prices surging over 4% to $105.3 a barrel and euro zone government bond yields rising to multi-year highs as a result.

What do ECB officials and external economists suggest about the likelihood and rationale for further rate hikes after this decision?

Multiple commentators indicate the ECB has left the door open to more tightening: Marchel Alexandrovich notes the new forecasts show core inflation at 2.3% in 2028—up from 2.2% in June—'which indicates that more rate hikes will be needed'; Patrick Ernst states 'another hike before year-end is no longer a tail risk' and that 'the odds of another before year-end have risen'; Ed Hutchings observes 'more than a further two hikes [are] priced' in markets; and David Rees cautions that 'the bar for further tightening is high,' suggesting this may be 'a final hike' unless growth and inflation 're-accelerate materially.'

ECB Raises Interest Rates Amid Energy Cost Inflation from Iran War

Sep 10, 2026

The ECB raised interest rates for the second time this year, citing inflation driven by soaring oil prices linked to the Iran conflict. Analysts warn further tightening may be needed as energy and food costs remain elevated.

reuters

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