All ECB policymakers agreed to keep interest rates unchanged at the July meeting, following June’s move — the first rate hike since 2023 — according to the latest minutes. The decision to pause was attributed to elevated uncertainty and the assessment that the full inflationary impact of the energy shock had yet to materialize.
Nonetheless, some members noted they would not have opposed another increase, arguing that the probability of additional tightening ultimately proving unnecessary was still low. Policymakers identified upside risks to inflation and downside risks to growth stemming from geopolitical tensions in the Middle East and the Russia–Ukraine war.
They also stressed the need for clear communication, specifically to avoid any pre-commitment regarding a possible move in September. The minutes underlined that the July pause should not be interpreted as the end of the tightening cycle; another rate hike was considered likely unless the inflation outlook improved significantly.
At the same time, policymakers wished to keep the September decision open, preserving room for a potential improvement in the medium‑term inflation outlook.
