Accounts of the European Central Bank's July meeting show policymakers judged that risks to the inflation outlook remain tilted to the upside, even though the Governing Council unanimously held rates steady. Some members said they would not have opposed a further hike, while headline inflation eased to 2.8% in June but stayed above target, leaving markets watching the September 10 meeting for a possible move.
Accounts of the European Central Bank's July 22-23 meeting show some policymakers would not have opposed raising rates further. Yet the Governing Council unanimously agreed to hold the deposit facility rate at 2.25%, the main refinancing rate at 2.40%, and the marginal lending rate at 2.65%, saying it needed more data before moving again after June's hike.
Why some members wanted to go further
Some members noted that incoming data had underlined the case for further policy tightening, stressing the low likelihood of a situation in which another hike would not be warranted and arguing that rates needed to move into mildly restrictive territory. Every member ultimately rallied behind the decision to hold, judging that moving slowly preserved the option value of waiting for more information. Pre-emptive action could still be justified, members said, if the situation turned sufficiently acute.
Medium-term inflation expectations stayed anchored, but short-term expectations had remained elevated since the war began. Members warned that the longer energy prices stayed high, the more likely they were to drive broader inflation through indirect and second-round effects, though there had been little evidence of those effects materialising so far.
Inflation cools, but not enough
Headline inflation fell to 2.8% in June 2026, down from 3.2% in May, still above the ECB's 2% target. Broad money supply growth, measured by the M3 aggregate, came in at 3.4% in July 2026. Geopolitical tensions in the Middle East kept energy markets on edge, and while prices tracked roughly in line with Eurosystem projections, they stayed elevated compared with pre-conflict levels.
September meeting back in focus
The next meeting is scheduled for September 10, 2026, and many analysts are pricing in the possibility of a 25 basis point increase if the inflation trajectory does not improve meaningfully before then, a move that would lift the deposit rate to 2.50%. The June hike is still working its way through the economy: such moves typically take 12 to 18 months to filter into lending rates, corporate investment, and consumer spending. Members stressed the need to communicate that risks still lie to the upside, and that the pause did not mean the tightening cycle had ended.
Sources: InvestingLive, Crypto Briefing
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