Persistent inflation pressures from Middle East energy shocks have driven the ECB to hike its deposit facility rate twice in 2026, most recently by 25 basis points to 2.50% in September, with staff projections showing headline inflation averaging 3.0% for the year and remaining above the 2% target into 2027. This hawkish policy stance, reinforced by resilient euro-area growth and upside risks to core inflation, underpins traders' 95.5% implied probability against any rate cut this year. Markets currently price further tightening through year-end, though data-dependent decisions and potential easing in energy prices represent the main variables that could alter the path.