ECB rate hike implemented, core inflation forecast indicates potential for further tightening

(1) Some institutional European economists have indicated that the ECB's second rate hike this year was in line with expectations, while also signaling that further policy tightening may be needed in the coming meetings.(2) Although no pre-commitment was made, the new quarterly forecasts show a core inflation rate of 2.3% for 2028, higher than the 2.2% predicted in June.(3) This suggests that the ECB needs to further raise rates in order to bring the inflation rate down to its 2% target in the medium term.(4) The upward revision of forecasts combined with high energy prices has fueled market bets on continued ECB tightening, with eurozone bond yields and money market pricing reacting in tandem.(5) Attention will next focus on Christine Lagarde's press conference statements, the actual path of core inflation, and the transmission effect of oil prices—these factors will determine whether the ECB will raise rates again within the year.