The ECB looks set to leave rates unchanged at next week’s monetary policy meeting and the rate cut that we have pencilled in for September is far from a done deal. Inflation is back down to the ECB’s 2% target but services inflation is still uncomfortably high. Meanwhile, the labour market is easing but still tight and economic activity seems to be holding up reasonably well. With all this in mind, the ECB will be comfortable pausing next week and giving nothing away about its likely next steps.
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