The European Central Bank is poised to raise interest rates again on Thursday, potentially to a record high level in order to tame surging inflation.
Steep spikes in energy prices in the aftermath of Russia’s invasion of Ukraine are becoming more ingrained, and policymakers at ECB are scrambling to keep the bloc’s most devastating spell of price growth in almost half a century from eroding household savings and weighing on business production.
Inflation in the Eurozone reached 9.1% in August, a record high and four times the ECB’s target inflation rate of 2%.
Expectations are currently moving towards a larger rise but lack full conviction, with the final decision coming in between a 50 and 75 basis point increase in the zero percent deposit rate.
Confirmation of such a move would mark the highest rate hike of the ECB’s interest rate since the bank’s establishment in 1998.