European Central Bank policymakers maintained the possibility of a September rate hike when they raised interest rates in July, but certain members appeared to suggest that such a move might no longer be necessary once new projections are disclosed, the minutes from the most recent ECB meeting showed. Over the course of just over a year, the ECB has increased rates from -0.5% to 3.75% in order to combat a surge in inflation. However, arguments in favor of a pause are gaining traction, driven by the belief that the cumulative tightening’s impact is potent enough to reduce underlying inflation. The minutes also revealed that forthcoming decisions will be contingent on data and will follow a meeting-by-meeting approach. Policymakers are striving to find a balance between addressing high inflation and managing the slowdown in economic growth.
