Markets expect the ECB to hold rates steady this week while leaving a September hike possible amid geopolitical uncertainty.
The European Central Bank is poised to keep its deposit rate unchanged at 2.25% this week, following June’s 25 basis point increase. Policymakers are likely to avoid firm guidance on future moves, instead tying any further tightening to the evolution of the Middle East conflict.
A hold would mark the first pause since the ECB began raising rates in 2023, with markets pricing in a 75% chance of no change. Analysts suggest the press conference will be scrutinized for shifts in language, particularly around inflation risks linked to geopolitical tensions.
Traders remain more sensitive to incremental signals than the rate decision itself, given the widespread expectation of a pause. A prolonged conflict could reinforce hawkish bets, while de-escalation may reduce the case for further hikes.