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ECB Hikes Rates Again Amid Rising Energy Costs

By Markets Desk · 2026-09-12 · 1 min read
A modern central bank building facade with large glass windows and stone columns.
Illustration: Tradingbird

The European Central Bank raised interest rates for the second time in 2026. Oil prices above US$100 drive the move.

The European Central Bank raised its benchmark interest rates on September 10. This marks the second increase in 2026. Energy costs drove the decision. Oil prices exceeded US$100 per barrel. Inflation risks persist in the euro zone.

Christine Lagarde called the hike a no-brainer. She warned that inflation may stay high longer than expected. The return to the 2 percent target could be delayed. Current estimates point to the end of 2027.

Energy Shocks Distort Inflation Forecasts

Geopolitical tensions in the Middle East pushed oil prices up. Attacks on shipping and energy assets intensified the pressure. Gas prices now approach severe scenario levels. The ECB forecasts were set before this latest spike. Economists view the current projections as outdated.

Arne Petimezas of AFS called core inflation forecasts untenable. He expects both 2026 and 2027 figures to rise. A December rate hike follows this view. The ECB may need to enter restrictive territory. Supply shocks continue to multiply across the region.

Markets Price In Further Tightening

Investors now expect more than three hikes in twelve months. Previous estimates ranged from two to three. Commerzbank economist Jörg Krämer revised his forecast. He now expects a 25 basis point hike in December. S&P Global Ratings sees demand adding to inflation.

Lagarde stated the ECB has not debated a future path. She refused to anticipate the next move. The bank focuses on providing price stability. Markets react to data while the ECB acts on mandates.

Growth Resilience Supports Hawkish Stance

The ECB raised growth forecasts for this year and next. The euro zone economy is proving more resilient. Stronger growth can fuel inflation pressures. This supports the case for continued rate increases. Labor markets remain relatively soft, however.

Underlying inflation fell last month. Wage indicators remain benign. A wage-price spiral is not immediate. Nordea economists expect two more hikes at quarterly intervals. The next occurs in December 2026. The final one is scheduled for March 2027.

Based on reporting by indiagazette.com, compiled by the Tradingbird desk.

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