Investors split on probability of 10th straight hike
ECB to raise inflation forecast for next year
202324 growth forecasts to be cut

FRANKFURT, Sept 14 Reuters The European Central Bank is set to decide on Thursday whether to raise its key interest rate to a record peak in what should be its final step in the fight against inflation, or take a break as the economy deteriorates.

The central bank for the 20 countries that share the euro faces a dilemma. Even after nine consecutive rate hikes, prices are rising at more than twice its 2 target and are not expected to slow to that level for another two years.

But higher borrowing costs across much of the world and China39;s economic malaise are taking a toll on economic growth, with a recession in the euro zone now a distinct possibility.

Analysts and investors had been leaning towards a pause in the ECB39;s rate increases until Reuters reported on Tuesday that the central bank was set to raise its forecast for inflation next year to more than 3, bolstering the argument for a hike.

Policymakers saw the 2024 projection as crucial to determine whether inflation, currently still above 5, was heading back to target or risked getting stuck at a higher level for too long.

The inflation momentum is simply too strong for the ECB to pause, Danske Bank economist Piet Haines Christiansen said.

A majority of economists in a Sept 57 Reuters poll had expected the ECB to hold rates steady this week, but with the mood shifting…