European Daily: ECB Preview—Keeping Options Open

Research evidence excerpt

European Daily: ECB Preview—Keeping Options Open

me down 2%."

"The case for a further hike is receding, [...] If the conflict remains contained and oil and gas

Wunsch 01/07/2026 prices continue to fall as expected by markets, the case for further tightening weakens

because the original shock fades before significant second-round effects emerge."

"From today’s perspective, we will need to raise interest rates further in order to bring inflation

Schnabel 25/06/2026

back to our two percent target over the medium term."

"I think the direction is clear and I think we still have work to do, […] We have created a very

Kazimir 23/06/2026

good position with the June rate hike decision to be able to react when it is necessary."

Source: Data compiled by Goldman Sachs Global Investment Research, Reuters, Bloomberg, ECB

A Hold with Little Guidance

We therefore expect the Governing Council to hold rates unchanged next week—as

widely anticipated—and provide little guidance on the path ahead (see Exhibit 5 and the

Appendix for details). We will focus on three aspects of the communication.

First, we expect the Governing Council to note in the Monetary Policy Statement that the

incoming data broadly match the June staff baseline. ECB officials are likely to

acknowledge that the inflation numbers have been slightly lower, but growth has been a

bit firmer and energy prices remain elevated (especially when considering natural gas

and oil product prices).

Second, the Governing Council is likely to reiterate its previous risk assessment in the

statement, noting downside risks to growth and upside risks to inflation. While

comments at the Sintra forum hinted at a possible improvement in the risk assessment—

with Lagarde noting that risks had become more broadly balanced—the recent rise in