ECB to raise rates a second time in September, but then done, say economists: Reuters poll - Reuters

According to a Reuters poll of economists, the European Central Bank is expected to deliver a second consecutive interest rate hike in September. However, the consensus suggests this will mark the peak of the current tightening cycle, with no further increases anticipated afterward.

The distinction between a September move and the subsequent pause is crucial for financial markets. If policymakers align with these expectations, it would signal that the ECB sees current inflation risks as manageable enough to stop after one more increment. For investors, the key takeaway is the trajectory: rates would be elevated but stable, rather than on an open-ended upward path. This outlook directly influences European bond yields, the euro’s valuation, and the cost of borrowing for businesses and households.

Market relevance lies in the gap between the ECB’s communication and the poll’s forecast. Should the central bank signal more work to be done after September, or conversely hint at earlier cuts, it would likely trigger a repricing across euro-denominated assets. For now, the prevailing narrative is one of a short, decisive response to inflation, followed by a period of observation to gauge economic impact.