The European Central Bank published the account of its July monetary policy meeting, showing that all Governing Council members supported keeping the three key interest rates unchanged after the June increase. The pause reflected lower-than-expected headline and underlying inflation, moderating wage pressures and limited evidence of second-round effects, while allowing more time to assess the Middle East conflict and its economic impact. Members stressed that the decision did not mark the end of the tightening cycle. Inflation fell to 2.8% in June from 3.2% in May, but members judged the outlook risks to remain tilted to the upside as renewed hostilities, elevated gas prices, refining constraints and low gas storage could prolong the energy shock and broaden its pass-through to other prices and wages. Some members would not have opposed another increase and argued that rates should move into mildly restrictive territory. The Council indicated that another hike would likely be needed unless the inflation outlook improved significantly, while emphasizing that it had not committed to an increase in September. The September meeting will include new staff projections and additional data on growth, inflation, wages and expectations. These inputs will help determine whether higher inflation remains primarily a direct energy shock or is becoming more persistent.
2026-08-27European Central Bank
European Central Bank account shows unanimous July rate hold amid upside inflation risks, with some members favoring further tightening
The European Central Bank’s July meeting account showed unanimous support for holding rates after the June increase, although some members favored further tightening. Inflation had fallen to 2.8%, but energy-related risks remained tilted to the upside and another hike was considered likely unless the outlook improved significantly. The Council made no commitment to raise rates in September.