European inflation hit 3.3% in August, largely due to rising energy prices linked to the Iran war:
Markets expect the European Central Bank to raise interest rates by a quarter percentage point, following its June hike:
However, economists warn that higher borrowing costs could negatively impact heavily indebted households and small- and medium-sized businesses:
Energy price pressures drove inflation in the euro zone back above 3%, with hard-hit businesses now likely facing a second blow from higher interest rates:
The ECB will have to weigh the economic cost that higher borrowing costs will apply to households and businesses:
"The ECB faces a dilemma: a trade-off between higher interest rates and economic cost," said Joe Nellis, head of economic research at MHA:
