Last week, Christine Lagarde, the President of the European Central Bank (ECB), refrained from providing a clear signal about the bank’s policy intentions, fueling an intensifying debate over ECB interest rates.
While there remains significant uncertainty about whether the ECB will raise rates in September, some economists anticipate that the bank will ultimately focus on core inflation and proceed with a rate hike.
However, economists at Berenberg Bank, led by Holger Schmieding, altered their forecast before Lagarde’s speech, raising the probability of the ECB pausing its rate hikes from 40% to 60%.
They noted that most central bank officials have emphasized that their decisions are data-dependent.
If real economic indicators decline and August’s inflation doesn’t show an unexpected increase, the ECB seems more likely to maintain its interest rates in September.
