Elevated euro area inflation, projected by ECB staff at 3.0% for 2026 amid Middle East-driven energy price surges, underpins the 96% market-implied probability against an ECB rate cut this year. The deposit facility rate stands at 2.50% following September’s 25-basis-point hike, with consensus forecasts pointing to a potential further increase to 2.75% by December amid resilient growth and limited second-round effects so far. Hawkish Governing Council communications and upward revisions to inflation outlooks reinforce trader views that policy will remain restrictive or tighten through year-end, consistent with historical responses to supply shocks. Tail risks include a sharp reversal in energy prices or faster-than-expected disinflation that could reopen easing discussions before 2027.