Global financial markets are looking forward to the ECB meeting scheduled for September. The meeting results may come as a surprise, as the central bank did not unveil its plans. It is too difficult to predict the future of the key interest rate. However, there are just two variants. The regulator will either continue monetary policy tightening or take a pause.
In most cases, the monetary policies of the leading central banks, such as the Federal Reserve and the European Central Bank, are transparent. The regulators prefer not to shock markets with their decisions and provide clear signals of the key rate changes. However, this time, the ECB decided to keep everything secret. ECB President Christine Lagarde said that in September, the bank might either raise the benchmark rate or keep it at the current level. At the press conference, the ECB president pinpointed that the regulator would base its actions on the data assessment.
Notably, last week, the ECB raised the benchmark rate by 25 basis points to 4.25%, returning it to the all-time high last seen in June 2000. "Data and our assessment of data will actually tell us whether and how much ground we have to cover. So we are deliberately data-dependent and we have an open mind as to what the decisions will be in September and in subsequent meetings. Because this determination based on data might vary from one month to the other. So we might hike and we might hold," Christine Lagarde said, answering the question about a possible ECB decision in September.
She also added that the recent decision to raise the key rate was one more step toward 2% inflation. "We are very strongly rooted in our determination to break the back of inflation and to take inflation back to 2% in the medium term on a sustainable basis," she concluded.
