Bank of America predicts ECB will raise rates again next week

ECB president Christine Lagarde. Around 200,000 people on tracker mortgages in Ireland face more immediate pain when interest rate hikes are announced because their rates are directly linked to ECB decisions. Picture: Michael Probst/AP

Bank of America Global Research predicted the European Central Bank (ECB) will hike all three policy rates by 25 basis points at its September meeting, citing a weaker growth outlook and no clear evidence of a peak in core inflation.

"If September inflation print challenges our disinflation view, we would likely delay our call for the first cut," said economists at Bank of America Global Research.

Aggressive campaign

The European banking regulator has raised borrowing rates by 4.25% in total since it began its aggressive hiking campaign last summer.

Following the last interest rate increase in July, the ECB said it will meet again in September but remained vague on whether it would impose another hike.

However, there is an understanding among experts that if the ECB does decide to hike rates again at their meeting next week, it is likely to be the rate rise implemented to drive down stubborn inflation.

Around 200,000 people on tracker mortgages in Ireland face more immediate pain when interest rate hikes are announced because their rates are directly linked to ECB decisions.

• Reuters with additional reporting by the Irish Examiner