The European Central Bank (ECB) is expected to raise its deposit facility rate by 25 basis points to 2.50% at its September 10 meeting, following a quarter-point increase in June. Markets are pricing more than a 95% probability of the move, while all 65 economists surveyed by Reuters from August 31 to September 3 forecast it. Bundesbank President and ECB Governing Council member Joachim Nagel backed the increase but declined to guide policy beyond September, citing volatile energy prices, financial-market turbulence and heightened uncertainty. Euro-area inflation accelerated to 3.3% in August from 2.9% in July, its highest level since September 2023 and above the ECB’s 2% medium-term target, although core inflation eased to 2.4% and services inflation moderated. Most economists expect September to be the final hike in the ECB’s shortest rate-hiking campaign since 2011, but interest-rate futures price a possible third move. Economists have raised their 2026 inflation forecast to 2.9% and do not expect inflation to return to target until late 2027. Nagel warned that prolonged inflation could generate second-round effects through wages and broader prices, while saying monetary policy cannot directly lower oil prices. Higher global long-term borrowing costs and concerns over France’s fiscal position further complicate the ECB’s policy challenge.