ECB Expected to Raise Rates Again This Week, but Signals Caution on Further Moves

According to Jin10, the European Central Bank is expected to raise its key interest rate for a second time on Thursday, but may signal caution on further hikes as additional tightening would push borrowing costs to levels that restrain economic activity. Eurozone annual inflation rose to 3.3% in August, the highest level in nearly three years and well above the ECB's 2% target, while policymakers have yet to see signs of the second-round effects they have worried about since the war closed the Strait of Hormuz and sent energy prices soaring. ECB President Christine Lagarde is likely to repeat that rates are not on a preset path and that investors should not assume more hikes are inevitable, while not ruling out further action as some economists see the chance of a third rate increase in December rising.