The European Central Bank is set to pause rate hikes today but signals a likely 25-basis-point increase next month.
The European Central Bank is expected to leave interest rates unchanged at today’s meeting, pausing after a series of hikes. Policymakers are adopting a data-dependent approach, with inflation risks still in focus despite softer June HICP prints.
June’s inflation data came in below expectations, easing pressure for immediate action. Updated staff forecasts and two additional inflation reports will inform the September decision, where a final 25-basis-point hike to 2.50% is anticipated. Markets will watch President Christine Lagarde’s press conference for signals on future policy.
The ECB is likely to maintain neutral communications, avoiding explicit forward guidance. The pause reflects a balancing act between persistent inflation risks and economic downside concerns.