FRANKFURT, September 3 — The European Central Bank is set to raise its deposit rate by a quarter-point to 2.50% at its policy meeting on September 10, according to a Reuters poll of economists published Thursday. All 65 economists surveyed between August 31 and September 3 predicted the increase, which would mark the second hike of the current cycle following a move in June. The deposit rate currently stands at 2.25%.
The expected tightening comes as euro zone inflation accelerated to 3.3% in August, driven largely by energy costs. That reading sits above the ECB’s 2% target, though most economists in the poll argue the energy price rises are unlikely to trigger broad inflationary pressures across the bloc.
If the September move goes ahead as forecast, the record shows it would be the ECB’s shortest rate-hiking campaign since 2011, when the bank raised rates twice in response to sharply rising oil prices — a sequence many policymakers now regard as a policy mistake. Despite the expected hike, roughly 91% of economists predict the deposit rate will end 2026 at 2.50%, and 78% see it holding there through the middle of 2027. That outlook contrasts with interest rate futures contracts, which are pricing in a third move.
Economists point to a fragile euro zone economy, public finance woes and surging bond yields as reasons the ECB is unlikely to tighten further. “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,” said Carsten Brzeski, global head of macro at ING.
He expects a September quarter-point rise but no more after that. “In other words, it’s difficult to envisage the ECB being willing to risk a recession to tackle what is still a textbook supply-side shock.” Pia Fromlet, euro area economist at SEB, offered a similar read on the post-September path. “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.
“However, there is an upside risk to our inflation forecast.” Economists have raised their 2026 inflation forecasts six times this year to 2.9% — the highest upward revisions in a year since 2022, when the ECB launched its most aggressive tightening campaign in decades to combat record inflation fuelled in part by Russia’s invasion of Ukraine. Forecasts for the current quarter and the next were revised to 3.2% and 3.3%, respectively, from 3.0% and 3.2% in the previous month.
Inflation is not expected to return to the ECB’s 2% target until late 2027, with core price pressures expected to firm over the next few quarters. ECB policymakers have little appetite to signal further tightening after September, partly due to well-anchored long-term inflation expectations, according to sources familiar with the matter.
The situation could change, however, if the Middle East conflict drags on or intensifies — high diesel, gasoline and food prices could push up short-term consumer inflation expectations and lead to wage pressures. For now, the central bank’s own guidance and the September meeting will show whether the hawks can make a case for more than a single, modest move.
