Societe Generale analysts expect no change in ECB policy next week but flag a potential September rate hike as markets fully price in.
The European Central Bank is expected to leave interest rates unchanged at its upcoming meeting, maintaining its data-dependent approach. Recent Euro Area economic data, including from Germany and France, have not significantly shifted the outlook, though recession risks in both countries appear lower than previously assessed.
Markets have fully priced in a September rate hike, which analysts view as a broadly neutral move to avoid delayed policy responses. However, conviction for further tightening beyond September remains low. The ECB may also revise its headline inflation forecast downward due to lower energy prices, while growth projections could weaken amid volatile data.
Uncertainty persists around second-round wage effects and inflation risks, though upside pressures have moderated. The central bank’s stance remains cautious as it assesses incoming data.