Overview
- The European Central Bank raised its main deposit rate by 25 basis points to 2.50% on Thursday, Sept. 10, 2026, and revised its 2026 inflation and growth forecasts higher.
- President Christine Lagarde described the risks to inflation as tilted to the upside and stressed the bank will decide meeting by meeting based on incoming data.
- Surging oil and European gas prices tied to hostilities involving Iran boosted headline inflation to about 3.3% in August and are the main reason for the ECB’s tightening.
- U.S. wholesale inflation and oil climbing above $100 a barrel pushed market pricing to about a 70% chance of a Federal Reserve rate hike next week.
- Markets now price non-trivial odds of more ECB hikes through the autumn, while higher bond yields and tighter financing conditions are already weighing on borrowing costs and currencies.