The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0904 ET - Even with inflation risks rising, the European Central Bank needs to tread carefully should it raise rates before the end of the year, Deutsche Bank chief European economist Mark Wall says. The ECB on Thursday raised its key rate by a quarter-point to 2.5%. A further hike in December may now be more likely than not, Wall says. But even though the economy has been resilient over the last six months, rapidly rising gas prices mean the negative supply shock is building, he says. "It will eventually hurt growth. The question is how much and when." (edward.frankl@wsj.com)

0902 ET - The European Central Bank's rate decision--a 25-basis-point hike as expected--offered little to EUR/USD that markets hadn't already anticipated, J.P. Morgan Private Bank's Patrick Ernst says. "The dollar [is] likely to remain in the driving seat from here, the macro investment strategist says. A "hot" U.S. CPI print ahead of next week's Federal Reserve interest-rate decision "could erode some of the pair's recent move higher," Ernst says. The August U.S. CPI data is due for release on Friday. The euro falls 0.2% to $1.1607 after headline U.S. PPI data for August came in slightly above expectations. (emese.bartha@wsj.com)

0859 ET - While the ECB's quarter-point rate hike was expected, conditions make any further tightening of monetary policy unlikely, David Rees at Schroders says in a note. "The outlook from here is much less certain," he says. While higher energy costs are driving up headline inflation, core inflation remains contained, he adds. Meanwhile, domestic demand is weakening, with tighter financial conditions already set to weigh on growth in the eurozone into 2027, Rees says. The ECB's rate increase doesn't smack of the start of a lengthy hiking cycle, and so unless growth or inflation pick up meaningfully, investors shouldn't expect to see rates nearing 3%, Rees says. "Despite the hawkish tone of today's statement and forecasts, we believe the bar for further tightening is high."(don.forbes@wsj.com)

0851 ET - The European Central Bank could be set to raise interest rates even further following Thursday's hike, Kamil Kovar at Moody's Analytics says. The central bank wasn't clear whether it would raise rates again later this year, but an upward revision to 2027-28 inflation forecasts has emphasized the scale of the eurozone's inflation dilemma, Kovar adds. The ECB also pointed out the resilience of the economy despite this year's jump in energy prices, he adds. "Both of these comments suggest that the governing council is open to raising rates further, increasing the odds of a third hike, which we now see as even odds, even if energy prices moderate from this week's levels," Kovar says. (don.forbes@wsj.com)

0850 ET - Another interest-rate hike by the European Central Bank before the end of 2026 is no longer a tail risk, J.P. Morgan Private Bank's Patrick Ernst says in a note after the ECB's quarter-point policy tightening. Driven by the latest escalation in the Middle East conflict, oil and gas prices have moved materially higher, bonds have sold off, and expectations for further central bank tightening have firmed, the macro investment strategist says. The ECB moved as anticipated, but what accompanied that rate decision matters more, he says. In keeping the door open to further tightening, policymakers made clear that an energy-led inflation risk is still very much in play, he adds. (emese.bartha@wsj.com)

0848 ET - The European Central Bank raises its expectations for inflation next year and in 2028, noting that the war in the Middle East continues to generate inflation pressure. ECB staff now projects headline inflation to average 2.5% in 2027 and 2.1% in 2028, up from 2.3% and 2.0%, respectively, in June's macroeconomic forecast. This year's inflation forecast is unrevised at 3.0%. For core inflation, which strips out energy and food, the inflation forecast is also seen 0.1 percentage point higher in 2027 and 2028--at 2.6% and 2.3%, respectively--but remains the same 2.5% this year. Risks for inflation are to the upside, the ECB notes. "Inflation is set to remain well above target for an extended period," it says. (edward.frankl@wsj.com)

0849 ET - By raising interest rates as expected, the European Central Bank is "acting decisively to bring rates to the upper end of what they view as the neutral range," Fidelity International's Conor Parle says in a note. The door is open to a further hike to bring rates into mildly restrictive territory and to reaffirm their commitment to price stability, the eurozone economist says. Recent resilient macro data will give the ECB comfort as they look to get ahead of above-target inflation becoming entrenched, Parle says. Factors such as the German fiscal rollout have supported growth even as headwinds relating to energy prices pose a threat. "Higher gas and fuel prices will keep the ECB vigilant to a broadening of price pressures." (emese.bartha@wsj.com)

0847 ET - The European Central Bank's decision to hike interest rates again, as expected, is a sign that inflation pressures have become structural, Joe Nellis at MHA says in a note. "The ECB has decided that the European--and global--economy is no longer facing merely a short-term inflation shock." Rates still remain below those in the U.K. and U.S., but the gap is closing, he says. This is worrying for the economy, with the hike expected to squeeze households and businesses. Still, the move looks necessary as inflation hit 3.3% in August and oil moved back above $100 a barrel, Nellis says. "An orderly resolution to the conflict in the Middle East would go some way towards calming inflation, but there are long-term ramifications that will endure beyond the end of hostilities." (don.forbes@wsj.com)

0843 ET - The European Central Bank lifted its projection for the eurozone's economic growth this year and next, reflecting the resilience of the economy to the impact of the war in Iran. The ECB's staff baseline projection for gross domestic product growth in its September macroeconomic forecast is 0.9% for 2026 and 1.4% for 2027, up from 0.8% and 1.2%, respectively, in the prior forecast made in June. For 2028, GDP growth is still expected at 1.5%. However, the outlook remains highly uncertain, with risks to the downside for economic growth, the ECB says. Eurozone GDP rose 0.6% in the second quarter, after zero growth in the first. (edward.frankl@wsj.com)

0841 ET - The euro falls further after the European Central Bank raised the key rate by a quarter point to 2.50%, as widely expected. The decision "had been clearly signaled by policymakers ahead of time and was fully discounted by financial markets," Capital Economics'Andrew Kenningham says in a note. The euro falls 0.3% on the day to $1.1594 following the decision, from $1.1617 beforehand, LSEG data show. (miriam.mukuru@wsj.com)

0840 ET - The European Central Bank deciding to hike interest rates again, as expected, is a sign that inflation pressures have become structural, Joe Nellis at MHA says in a note. "The ECB has decided that the European -- and global -- economy is no longer facing merely a short-term inflation shock." Rates still remain below the U.K. and U.S., but the gap is closing, he says. This is worrying for the economy, with the hike expected to squeeze households and businesses. Still, the move looks necessary as inflation hit 3.3% in August and with oil back above $100 a barrel, Nellis says. "An orderly resolution to the conflict in the Middle East would go some way towards calming inflation, but there are long-term ramifications that will endure beyond the end of hostilities." (don.forbes@wsj.com)

0837 ET - Eurozone bond yields extended their rise with the 10-year German Bund yield hitting another 15-year high after the European Central Bank's well-anticipated quarter-point rate hike and upward revision of inflation for 2027 and 2028. The 10-year Bund yield--which had climbed to successive 15-year highs this session even before the ECB's decision--last trades 3.6 basis points higher at 3.464%, according to Tradeweb.