ECB Awaits Next Interest Rate Move

Inflation in the eurozone rose to 3,3 percent in August, reaching its highest level since September 2023 (FuW, 1.09.2026). The increase was driven primarily by energy prices: The European gas price climbed 25 percent compared to the level in June 2026, while the price of North Sea Brent crude rose by only 4 percent. It is also noteworthy that industrial prices, excluding energy, have accelerated. This suggests that companies are increasingly passing on their higher costs to customers. Core inflation, which excludes energy and food, was somewhat more subdued in August. However, economists warn against interpreting this as a trend reversal just yet.

With these figures, inflation is approaching the baseline scenario projected by ECB economists, who expect an inflation rate of 3,4 percent for both the third and fourth quarters, well above the central bank’s 2 percent target (FuW, 1.09.2026). The ECB Governing Council had already raised the key interest rate from 2.0 to 2,25 percent in June, the first increase in nearly three years, and left rates unchanged in July. This decision had largely been anticipated by market participants (LBBW, 28.08.2026). ECB Executive Board member Isabel Schnabel sees room for higher interest rates and, in an interview, pointed to the ongoing geopolitical tensions in the Middle East. At the same time, she noted that the eurozone’s robust economy poses upside risks to inflation (FuW, 27.08.2026).

For the September meeting, a clear majority of market participants now expect another 25-basis-point hike. This would mark the shortest rate-hiking cycle since 2011 (Raisin, 1.08.2026). After that, interest rates could remain at this level until at least mid-2027, provided that economic conditions and inflation data do not change significantly. In Switzerland, too, an interest rate hike by June is largely priced into the futures markets (FuW, 1.09.2026).

Macroeconomic factors such as the interest rate environment and interest rate expectations are extremely relevant to the capital markets. As early as the beginning of summer, the interest rate outlook in the U.S. demonstrated just how sensitive growth stocks can be to a shift in policy. When expectations shifted from potential cuts to further hikes, technology and growth-oriented stocks came under particular pressure. Defensive and value-oriented stocks, on the other hand, proved comparatively resilient (Reuters, 2.07.26).

The situation is similar for the eurozone. Following the interest rate hike in June, the ECB initially opted for a pause in July to assess the impact of the previous move on inflation, wages, and demand, but explicitly did not rule out further rate hikes (Bankhaus Herzogpark, 19.08.2026). The key factor is likely to be whether the ECB communicates the September hike as a provisional conclusion or leaves the door open for further moves. In their baseline scenario, some economists assume that, following the September hike, the ECB will likely implement one more rate hike before pausing in light of easing inflation and gradually easing monetary policy back toward the 2 percent target. Headline inflation in the eurozone could thus remain at around 2,7 percent in 2026 before easing to just under 2,3 percent in 2027 (payoff.ch, 28.08.2026). Should price pressures persist, a more prolonged period of restrictive monetary policy would also be conceivable, which could place a sustained burden on interest-rate-sensitive sectors.

A similar pattern can be observed in the cryptocurrency market. Rising key interest rates tend to drain liquidity from the markets, which can weigh on risky assets such as Bitcoin. Conversely, falling interest rates have historically tended to be supportive (Finanzwelt, 4.12.2025). The fact that this connection remains relevant today became evident in mid-August: Even the mere hint of a possible Japanese rate hike in September, combined with interest rate pressure in the U.S., was viewed as a negative factor for global risk assets (finanzen.net, 19.08.2026). For investors, this means one thing above all: The central banks’ response to market conditions remains a key driver of capital markets. The coming weeks, with the ECB’s September projections and the fall economic data, should reveal whether price pressures prove to be a temporary summer phenomenon or whether central banks will need to prepare for a prolonged monetary policy balancing act.