As eurozone inflation accelerates, markets expect ECB rate hike
Eurozone inflation rose to 3.3% in August, and financial markets now expect the European Central Bank to raise its key interest rate to 2.5% at its September 10 meeting.
Inflation in the eurozone picked up pace in August, reaching 3.3%, prompting financial markets to anticipate that the European Central Bank (ECB) will soon raise its benchmark interest rate. The main driver behind the price increase has been rising energy costs, ERR radio news reported on Wednesday, September 2.
ECB economists note that the current energy shock differs significantly from the situation seen in 2021-2022. Among the causes cited for the current price rise is the ongoing war in the Middle East and the related closure of the Strait of Hormuz.
Forecasts and the September 10 decision
Even under the ECB's most optimistic scenario, which assumed a swift end to the conflict, eurozone inflation was not expected to return to the 2% target before 2027. With the conflict continuing and inflation reaching 3.3% in August, financial markets now anticipate a tightening of monetary policy.
According to market expectations, the ECB could raise its key interest rate from the current 2.25% to 2.5% at its meeting on September 10.
Estonia holds lowest inflation in the eurozone
It was previously reported that Estonia retained its status as the eurozone country with the lowest inflation in August 2026, a position it has now held for a second consecutive month. According to a preliminary estimate published by Eurostat on September 1, annual consumer price growth in Estonia stood at 1.3% in August, compared to 2% in July. Meanwhile, inflation across the eurozone as a whole accelerated noticeably, rising from 2.9% in July to 3.3% in August.
