A large majority of economists polled expect the European Central Bank (ECB) to deliver one more interest-rate increase next month and then maintain policy settings through at least the middle of 2027, according to a poll published on Thursday.
Respondents pointed to elevated energy prices and ongoing inflationary pressures as the main reasons the central bank is likely to act again after a June rate rise and a pause in July. The conflict between the United States and Iran - which was initially seen as a limited episode - has continued into a sixth month with no clear end in sight, keeping oil prices about 25% above pre-war levels and contributing to euro zone inflation of 2.9% last month.
The ECB raised rates in June and refrained from a move at its July meeting while signalling that another increase was probable. Historical behaviour by the bank - which has not stopped after a single rate hike in comparable cycles - together with resilient economic activity, persistent price pressures and volatile energy markets were cited by economists as reinforcing the case for another tightening step.
An 83% majority of respondents - 57 out of 69 economists surveyed between August 10 and 13 - predicted the ECB would raise its deposit rate by a quarter point to 2.50% in September. That share rose from 72% in the poll taken before the July meeting and from about 65% in June.
George Buckley, chief European economist at Nomura, stressed the risk of delaying action. "The longer oil prices stay at these levels, the higher they go, the greater the risk we see second-round effects developing. The ECB can’t do anything about the second-round effects without seeing them but they can act early which is what the ECB has been doing," he said.
Buckley added that the optics of a single hike would resemble fine-tuning - which he argued is not a genuine monetary policy strategy. "The risk is if the ECB did just one it would look like a fine-tuning exercise which everyone knows you can’t really do in monetary policy. If they go once they’re probably going to go again... Given how obvious a rate hike looked to the ECB Governing Council in June it makes me think another one is highly likely."
Survey participants also expressed expectations for the path of policy after September. Around 80% of economists expected the deposit rate to finish the year at 2.50%, while 63% anticipated that it would remain at that level until at least the third quarter of next year.
If the ECB follows the path respondents expect, the tightening cycle will become the bank’s shortest since 2011, when it enacted two rate increases in response to an energy-price shock - a policy move that many now view as erroneous.
Inflation forecasts shifted through July but have subsequently moved higher. Economists reduced their 2026 inflation projections in July for the first time in six months but have since reversed that reduction. Median forecasts for the final two quarters of this year were raised by 20 basis points to 3.0% and 3.2% respectively. The poll signalled that inflation is not expected to return to the ECB’s 2% target until the third quarter of 2027. Core price pressures were also projected to firm over the coming quarters.
Melanie Debono, senior Europe economist at Pantheon Macroeconomics, highlighted how sticky headline inflation is shaping the outlook. "Headline inflation will remain sticky at just above 2.5%. This is what backs our forecast for another rate hike ... The risk to our forecast for one more rate hike is towards further interest rate increases," she said. "The risk of second-round effects from high energy costs in services prices remains modest ... in core goods though that appears higher."
On the growth front, the euro zone economy expanded by a stronger-than-expected 0.4% in the last quarter. The poll’s consensus forecast calls for further growth of 0.2% this quarter and 0.3% in the next, prompting respondents to lift their 2026 growth projection to 0.8% from 0.5% in July - the first upward revision in seven months.
Implications for markets and sectors
- Energy: Elevated oil prices are a central driver of headline inflation and the justification for further monetary tightening.
- Consumer goods and services: Economists flagged increased second-round effects in core goods and a more modest risk in services, signalling pressure on consumer prices.
- Financial markets: Expectations of a near-term rate increase followed by a prolonged pause influence interest-rate sensitive assets and policy-dependent valuations.