Nordea’s assessment remains that the bank has finished raising interest rates.

The European Central Bank’s July monetary policy meeting offered little guidance on what the ECB will do at its September meeting.

Activity data has been weak since the July session, while inflation has held steady. In fact, the risks of inflationary stagnation are mentioned twice in the minutes. Recently, a number of hawkish members of the Board of Governors have spoken in favor of another rate hike, while most, including Executive Board member Schnabel, were game-minded.

“We stick to our long-held baseline scenario of interest rates peaking at 3.75% and think the European Central Bank will hold off on raising interest rates in September while maintaining its contractionary bias. Now, this will be a close call and there could be a fierce battle between hikers and those who want to keep rates unchanged at the European Central Bank’s September meeting.

source: ING

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