ECB meets but all eyes remain on the US The ECB is preparing for the last meeting before the summer lull with developments elsewhere making President Lagarde’s job even more challenging.
ECB meets with near zero chances for a rate cut. ECB members continue to disagree about the rates outlook. A dovish shift looks unlikely as the focus rests with the Fed. Euro showing unexpected strength despite political unrest. While the world is still digesting last week’s weaker US CPI report, the weekend’s attack on US presidential candidate Donald Trump and the collapse of the rumoured Israeli-Hamas truce, ECB members are scheduled to debate on the progress made since the June 6 gathering.
Until their confidence about the inflation outlook increases considerably, they are unlikely to support any rate moves. What does this mean for Thursday's meeting? The market does not expect a surprise interest rate change on Thursday. It is probably too early for another rate cut, considering the volatile conditions both in the euro area and abroad, with the ECB doves possibly deciding to shift their focus to September.
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