Bank of America expects the European Central Bank to raise interest rates in December, with the energy shock as a core consideration.

(1) Bank of America expects that the European Central Bank will raise interest rates by 25 basis points in December, citing that a new round of energy shocks will keep inflation in the eurozone above the central bank's target level for a longer period. (2) The recent rise in European natural gas and oil prices is intensifying inflation concerns, and the ongoing geopolitical tensions as well as the lack of breakthrough in the Iran conflict may keep energy markets tight during the winter demand peak. (3) Bank of America noted in its report that economic growth may still perform reasonably, but the strength is likely to fall short of current levels and the bank doubts that significant second-round effects have yet to emerge. (4) The bank pointed out that it is not impossible for the European Central Bank to take action in October, but this would likely require significantly higher inflation data.