European Central Bank (ECB) policymakers are under renewed pressure as fresh conflict in the Middle East pushes oil prices upward. The escalation has raised concerns about inflation in the eurozone, prompting debate over whether to raise interest rates again this week. The ECB had increased rates in June for the first time since 2023 after inflation surged, but most analysts now expect the main rate to remain unchanged at 2.25 percent.

Economists cited in the report said the recent rise in oil prices has not yet had a broad impact on eurozone inflation. Felix Schmidt of Berenberg Bank and Carsten Brzeski of ING both suggested that the ECB is likely to hold rates steady, though a small chance of a hike remains. The renewed conflict, including Iran’s closure of the Strait of Hormuz, has intensified debate between policy “hawks” favoring tighter measures and “doves” preferring flexibility.

Investors are expected to watch ECB President Christine Lagarde’s post-meeting remarks for clues about future policy direction. Some analysts believe another rate increase could come in September, though the outlook remains uncertain.