Persistent inflation pressures from Middle East energy shocks have driven the ECB to raise its deposit facility rate twice in 2026, most recently to 2.50% in September, with staff projections showing headline inflation averaging 3.0% for the year—well above the 2% target. Recent Reuters economist surveys and market pricing point to a likely December hike and further tightening into 2027, reflecting resilient growth and upside risks to prices that make additional easing improbable before year-end. This underpins the 96% market-implied probability against any 2026 rate cut. Tail risks include a rapid de-escalation of geopolitical tensions sharply lowering oil prices or an unexpected economic slowdown prompting earlier policy reversal.