The European Central Bank will lift interest rates for the final time in December following a pause next week, economists say, at odds with market bets on far more hikes lying ahead.

An overwhelming majority in a Bloomberg survey said the deposit rate will be raised by a quarter-point to 2.75% in the ECB’s final meeting of 2026 and stay there until May 2028. Traders, by contrast, see three more moves over the next year.

The findings cement a long-standing divide over how aggressively policymakers will have to act to bring consumer-price gains back to 2% from almost double that now. While investors’ focus is locked on the steady advance of oil prices, analysts point to the continued absence of knock-on effects for inflation.

“There are still no signs that energy inflation is spreading into broader wage and price setting,” said Bas van Geffen, an economist at Rabobank. “The ECB doesn’t need to accelerate its hiking cycle and can wait until December.”Borrowing costs have been increased twice in response to the Iran war, in June and September. While inflation has quickened and reached 3.8% last month, output has proven more resilient than most expected.

Officials want to prevent the energy shock from becoming embedded in the economy and had toyed with another hike this month. A quarterly pace remained likelier, though, with fresh projections due at December’s meeting.

September’s outlook envisaged gross domestic product rising 0.9% this year and 1.4% in 2027, accompanied by increases in consumer prices of 3% and 2.5%. In an adverse scenario, inflation was projected to reach 3.1% and 3.2%.

With oil prices topping $110 a barrel, more than two-thirds of economists consider the euro-zone economy to be worse than September’s baseline.

“The longer headline inflation stays high, the harder it becomes to dismiss second-round effects for wages, prices and expectations,” said Dennis Shen, a lecturer at the International School of Management in Berlin. “For the ECB, an inflation overshoot is now a far greater medium-term risk than an undershoot.”Beyond the Middle East, policymakers are assessing how much rising bond yields are tightening financial conditions. President Christine Lagarde and others have argued this will curb economic growth and limit energy transfer to inflation.

With the yield on benchmark French debt hitting 5% this week for the first time since 2002, some investors even see a risk of a new euro debt crisis. Speculation is mounting on how bad things would have to get before the ECB stepped in with its as-yet-unused firefighting tool, the Transmission Protection Instrument.

Economists reckon the bar is very high, with 70% dismissing intervention in any form and about 90% ruling out TPI, which was fashioned to counter unwarranted, disorderly market dynamics that threaten policy transmission across the euro area.

“The increase of bond yields can be explained very well by stronger global capital demand and a deterioration of public finances in many countries,” said Karsten Junius, chief economist at Bank J Safra Sarasin. “It would be difficult for the ECB to justify the use of TPI in these circumstances.”Some economists deem less radical steps possible, like verbal interventions, dovish signals on rates or a halt in quantitative tightening, under which the ECB lets the stock of bonds it during past crises mature without them being rolled over.

“There’s very little the ECB can currently do to help France as long as France is not willing to help itself,” said Carsten Brzeski, ING’s global head of macro. “The only thing the ECB could do, as bond markets are taking over the ECB’s job, is to sound somewhat more dovish and try to scale down rate-hike expectations.