The European Central Bank is anticipated to keep its benchmark interest rate unchanged at its upcoming policy meeting this Thursday, as heightened geopolitical tensions in the Middle East trigger significant volatility in international energy prices. The bank may also signal the potential for further rate hikes in the future. Analysts note that the rebound in energy costs is introducing new uncertainty into the eurozone's battle against inflation.

The ECB previously raised its main refinancing rate by 25 basis points to 2.25% in June of this year, marking its first rate increase since 2023. Data shows that the eurozone's Consumer Price Index (CPI) rose by 2.8% year-on-year in June, slowing from 3.2% in May but still persistently above the ECB's medium-to-long-term inflation target of 2%. With shipping disruptions in the Strait of Hormuz driving up Brent crude and natural gas prices once again, market concerns about a resurgence in inflation have risen significantly.

Yannis Stournaras, Governor of the Bank of Greece, emphasized that the sharp volatility in energy prices is putting the European Central Bank under renewed intense pressure in its efforts to curb high inflation. The market widely expects ECB President Christine Lagarde to express a firm stance on inflation risks following the meeting. However, against the backdrop of ongoing geopolitical turbulence and heightened economic downside risks, the ECB is unlikely to provide early clarity on the policy path for its September meeting.

Andrew Kenningham, Chief Europe Economist at Capital Economics, analyzed that as rising natural gas prices gradually feed into household energy bills, combined with elevated food price inflation, the eurozone's inflation rate could exceed 3% again before the end of this year. Industry insiders suggest that, given the difficulty of geopolitical risks subsiding in the short term, disagreements within the ECB's decision-making body regarding the scale of future monetary policy tightening are likely to become more apparent.