ECB policymakers split as ING says one September hike may suffice

ECB policymakers meet tomorrow with ING chief economist Marieke Blom saying one rate hike could be enough to address inflation. Most economists polled by Reuters expect the deposit rate to end 2026 at 2.50% and stay there into 2027, but markets are pricing more tightening because the Iran conflict keeps energy prices elevated. The choice sets borrowing costs for households and companies across the eurozone.

Bottom line — The ECB's choice is whether one hike to 2.50% is insurance against an energy shock or the start of a longer tightening cycle.

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• August data show why the debate exists: euro-area inflation hit 3.3%, energy inflation 14.3%, but core inflation eased to 2.4%, per Eurostat figures cited by FX Empire.
• Blom told Bloomberg Television that core inflation, services and wages show no significant pressure, so one hike should be enough.
• A Reuters poll found 91% of economists expect the deposit rate to end 2026 at 2.50%, and 78% expect it to stay there into mid-2027.
• Financial futures point to another increase after September - Reuters reported traders saw as many as two extra moves over the following year.
• ING frames the expected move as an 'insurance rate hike' to protect credibility; ECB Executive Board member Isabel Schnabel argues policy may not be tight enough to return inflation to target.
• Natixis warns that sustained rises in diesel, petrol and food prices could feed wage demands, turning an energy shock into broader domestic inflation.
• In May, Berenberg's Holger Schmieding told CNBC that hiking into weakening demand in Germany, France and Italy would be 'a big mistake' and could bring a mild recession.
• The Reuters survey also put average euro-area inflation at 2.9% for 2026, with a return to the 2% target only in late 2027.

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