Middle East conflict pushes up inflation, ECB may "stand pat" until final rate hike in December

According to the Zhihui Finance APP, surveyed economists say the European Central Bank will wait until December for a final interest rate hike to curb inflation triggered by the Middle East conflict.

The surveyed economists expect the ECB Governing Council to raise the deposit rate to 2.75% at its final meeting of the year, thereby skipping the next rate hike opportunity at the end of October. In the previous round of surveys, analysts predicted that the 25-basis-point hike in September would mark the end of the current cycle.

The European Central Bank may implement its final interest rate hike in December

In recent weeks, with oil and natural gas prices surging, market expectations have shifted. The ECB also raised its inflation outlook last week, supporting the forecast that "further tightening is needed to achieve the 2% target." Investors are betting on at least three more rate hikes.

According to sources, officials also expect further policy tightening, but they have not yet formed a clear view on whether or when to raise rates. Central Bank of Ireland official Gabriel Makhlouf told Bloomberg TV on Thursday that in a period of uncertainty, "every meeting is one where action may be taken."

Economists surveyed by Bloomberg predict that interest rates will remain at 2.75% until December 2027, when the ECB will finally begin to cut rates.