ECB Holds Rates This Week, Expected to Hike in September as Middle East Tensions Support Euro

According to analysts, the European Central Bank is expected to hold interest rates unchanged this week but hike 25 basis points in September, supported by elevated Middle East tensions and rising energy prices. Market pricing shows the ECB may deliver two more rate hikes before year-end. U.S. inflation data weakness has narrowed rate differentials in favor of the euro, as energy price gains have failed to bolster Federal Reserve hike expectations.
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