The European Central Bank is expected to announce a new interest rate hike on Thursday, after having kept key rates unchanged in July. Analysts estimate the increase to be 25 basis points, bringing the interest rate to the upper limit of the neutral zone.
The expectation is that the ECB will raise the deposit rate to 2.5%, according to forecasts by Michael Krau, global public markets investment director at Allianz Global Investors. This will be the second interest rate increase at the September meeting.
The move comes amid inflationary pressure in the euro area, which has led the ECB to continue its monetary tightening cycle. Thursday's decision marks another step in the interest rate normalization policy by the European Central Bank.
