Recent geopolitical tensions in the Middle East have driven energy prices higher, pushing euro area headline inflation to around 3.2% and prompting upward revisions to ECB staff projections for 2026 and beyond. The central bank raised its deposit rate by 25 basis points to 2.50% in September and signaled ongoing vigilance, with policymakers noting upside risks to inflation from persistent energy shocks. A Reuters poll of economists shows near-unanimous expectations for a hold in October followed by another 25 basis point hike in December, aligning with the market's strong consensus for that outcome. Resilient eurozone growth has provided room for further tightening without immediate recession concerns, though core inflation trends remain more contained.