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The ECB raised borrowing costs for the second time this year on Thursday, taking its key interest rate to 2.50%. Policymakers are also preparing for further tightening in the coming months, with an October move possible, two sources told Reuters. Read more: Global Market: China, Hong Kong stocks fall as rate hike fears weigh on sentiment Nagel said the ECB's current policy rate was at the upper end of a neutral range, a level that neither stimulates nor significantly slows economic activity. However, he indicated that persistent energy price pressures could prompt the central bank to go beyond that range. The outlook for interest rates will depend heavily on the trajectory of energy prices and broader inflation developments over the coming weeks, Nagel said, according to Reuters. Read more: Global Market: China state insurers, banks to raise up to $54 billion to bolster capital The ECB has been forced to reassess its inflation outlook as the war pushes energy prices higher, raising concerns that a prolonged increase in fuel costs could feed into consumer prices and make it harder for inflation to return sustainably to the central bank's target. Higher energy prices also pose a challenge to economic growth, potentially squeezing household purchasing power and business margins while simultaneously increasing inflationary pressures. The ECB's next policy decisions will therefore hinge on whether the energy shock proves temporary or develops into a more persistent source of inflation. If price pressures remain elevated, policymakers could face growing pressure to tighten monetary policy further despite the risk of weakening economic activity. Disclaimer: The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimershere (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
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