The European Central Bank may raise interest rates again in September, Lagarde warns of escalating inflation risks in the Middle East.

According to informed sources, European Central Bank officials are prepared to further raise interest rates in September, unless there is a significant improvement in the inflation outlook in the euro area. Based on the current information available, particularly the economic impact of the Middle East conflict, insiders at the European Central Bank believe that a further 25 basis point rate hike may be necessary to curb sustained inflationary pressures. However, the sources stress that no final decision has been made yet, and the policy path could still change if the situation in the Middle East improves, peace negotiations progress, or if the eurozone economy experiences a more severe slowdown than expected. This stance is consistent with the ECB's policy framework of making decisions at each meeting. The ECB spokesperson declined to comment on future interest rate policies. ECB President Lagarde had already signaled the possibility of a rate hike in September during a press conference in Frankfurt on Thursday. She revealed that during the meeting, some members of the governing council had discussed whether immediate action should be taken, but ultimately decided to keep the deposit facility rate unchanged at 2.25%. Lagarde said, "Indeed, some council members did consider an interest rate hike. However, we believe it is appropriate to maintain a wait-and-see approach for now, and will closely monitor developments in the coming weeks along with the upcoming economic data." Last month, the ECB became the first central bank among the G7 countries to start raising interest rates since the outbreak of the Middle East conflict, placing it at the forefront of major advanced economies responding to inflation pressures. Lagarde reiterated that the risks to eurozone inflation remain tilted to the upside. She explained that energy shocks could further exacerbate and have a stronger impact on other commodity prices and wages. The longer energy prices remain high, the greater the likelihood of pushing overall inflation higher. In recent weeks, tensions in the Middle East have escalated. After Iran-backed Yemeni Houthi forces claimed to have attacked two Saudi oil tankers on Thursday, international oil prices surged significantly, with Brent crude prices breaking $100 per barrel for the first time in two months, further fueling concerns about rising energy prices and a resurgence of global inflation.