Why is the ECB expected to raise interest rates on Thursday, and what specific external event is driving this decision?

The ECB is expected to raise its policy rate to 2.50% from 2.25% on Thursday to counter an energy-driven surge in inflation triggered by the Iran war; attacks by both the U.S. and Iran since the end of August on military, shipping, and energy assets have sent oil and gas prices soaring again, reviving inflation fears in the fuel-importing euro zone.

What do recent economic indicators suggest about the euro zone’s resilience, and how does that influence the ECB’s policy stance?

Recent growth data show the 21-country euro zone economy has held up better than anticipated despite higher fuel costs, competition from China, and drought impacts — and bank lending even picked up in July, suggesting the June rate hike had not yet dented activity; this resilience gives policymakers scope to tighten further, leading economists to expect President Lagarde to maintain a 'hawkish wait-and-see stance' with the door open to additional hikes.

ECB Set to Hike Rates as Iran War Fuels Fresh Inflation Fears

Sep 9, 2026

The ECB is set to raise interest rates as the Iran conflict drives up oil and gas prices, fueling inflation fears in the euro zone. Policymakers may tighten further as Brent crude reaches $100 per barrel, impacting energy costs and economic outlooks.

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