ECB: On track for a second hike in September

Research evidence excerpt

ECB: On track for a second hike in September

J P M O R G A N Europe Economic Research

23 July 2026

ECB: On track for a second hike in

September

Economic and Policy Research

Greg Fuzesi

(44-20) 7134-8310

greg.x.fuzesi@jpmorgan.com

J.P. Morgan Securities plc

• ECB held rates today, but “some” governors considered a hike

• A September hike remains very likely and the risk is skewed to another one

thereafter

• Rates outlook is, however, very dependent on how the situation in the

Middle East evolves

• A key point: growth has been resilient recently and therefore higher

energy prices imply more ECB hiking

The ECB left rates on hold today, as was universally expected. There were,

however, clear signals that the direction of travel for rates remains upwards. First,

“some” governors asked themselves whether a hike was already warranted today

before agreeing to wait for the many data reports that will be available before the

September meeting. Second, the policy statement noted that the “outloook for

energy prices” had moved back “close to the baseline” from June. The baseline has

almost three hikes factored in and still shows core inflation overshooting the target

over the entire forecast horizon. During the press conference, Lagarde added that,

from today’s perspective, the “milder” scenario from June was looking unlikely.

All of this clearly points to a September hike, which remains in our forecast.

Today’s meeting shed much less light on what might happen after September. This

is understandable given the huge volatility in energy markets and the

unpredictability of the situation in Iran. As Lagarde said, the situation can change

daily and hourly. Because of this, the ECB stuck today to is basic policy framework