Focus Europe: ECB Reaction: A September hike, at least

Research evidence excerpt

Focus Europe: ECB Reaction: A September hike, at least

Deutsche Bank

Research

Economics Date

Focus Europe 23 July 2026

ECB Reaction: A September hike, at least

Mark Wall

The 2026 Extel Annual Fixed Income Survey is still open. If you’ve appreciated our Chief Economist

work over the last year, it would mean a lot to us if you’d be able to vote. For how +44-20-754-52087

and where to vote for us and the DB European Economics team, please see here.

Extel's landing site for the awards is here. Thank you! Peter Sidorov, CFA

Senior Economist

• As expected, the ECB left policy rates unchanged in July. In terms of +1-585-615-0253

messaging, there has been a round trip since the last meeting. The

Clemente Delucia

implicit hawkishness of June had started to subside in Sintra as oil prices Senior Economist

fell post-MOU. It has returned as the conflict in the Middle East re- +39-02-402-43012

escalates. The bottom line is, the ECB did not challenge what the market

is currently pricing: policy rates rising to 2.75% and possibly higher. Yacine Rouimi

+44-20-754-71014 • Despite the absence of formal guidance, a hike in September feels more

or less a done deal. That some governors were already asking themselves Sanjay Raja

whether or not to hike in July underlines the high likelihood of rates rising Chief UK Economist

to 2.50% in September. The question is whether 2.50% will mark the end +44-20-754-50530

of this tightening cycle or not? We are holding our view that the ECB

stops at 2.50%, but the risks are clearly skewed towards a further hike to Michael Kirker

Economist

2.75%. For that risk to materialise energy prices will need to remain +44-20-754-72237

persistently elevated and/or there would need to be evidence of second-

round effects.