{"id":44644,"date":"2026-07-26T00:22:42","date_gmt":"2026-07-26T04:22:42","guid":{"rendered":"https:\/\/sharewatch.com\/wp\/2026\/07\/26\/ecb-keeps-rates-unchanged-september-hike-stays-in-play\/"},"modified":"2026-07-26T00:22:42","modified_gmt":"2026-07-26T04:22:42","slug":"ecb-keeps-rates-unchanged-september-hike-stays-in-play","status":"publish","type":"post","link":"https:\/\/sharewatch.com\/wp\/2026\/07\/26\/ecb-keeps-rates-unchanged-september-hike-stays-in-play\/","title":{"rendered":"ECB keeps rates unchanged, September hike stays in play"},"content":{"rendered":"
\n

The European Central Bank decided to keep interest rates unchanged today, but at their meeting some ECB governors asked whether the bank should hike rates.<\/p>\n

At a press conference this afternoon, the ECB’s president Christine Lagarde said that the outlook for inflation was “well above target” into the first half of next year.<\/p>\n

After a discussion ECB governors decided unanimously to leave rates at their current level of 2.25%.<\/p>\n

As Ms Lagarde held her press conference this afternoon, oil broke through the $100 a barrel barrier as Yemen’s Houthi rebels struck oil tankers in the Red Sea.<\/p>\n

Many analysts now believe the ECB could increase rates by quarter of a percentage point in September.<\/p>\n

Ms Lagarde said that the ceasefire between the US and Iran had been short-lived and led to “serious developments on commodity markets”.<\/p>\n

Natural gas prices, which had stayed relatively lower in recent months, are now also at their highest level in more than three years, adding to price pressures.<\/p>\n

“Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out,” the ECB said in a statement.<\/p>\n

“The Governing Council is therefore closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects,” the ECB said.<\/p>\n

“The outlook for energy prices, while highly volatile, currently stands close to the baseline of the June Eurosystem staff projections and well above the levels recorded prior to the conflict in the Middle East,” the bank added.<\/p>\n

The ECB raised rates in June and hinted at more to come but a string of benign data on prices, wages, economic activity and inflation expectations in the weeks since has made a quick follow-up step less urgent.<\/p>\n

Investors are betting on almost three more interest rate increases in the coming year, with a first move fully priced in by October and the second by next February.<\/p>\n

This pricing reflects energy prices more than economic fundamentals, however, and most economists polled by Reuters say the 21-country euro zone will need far less policy tightening to keep a lid on inflation, which could hover around 3% in the coming months, above the 2% target.<\/p>\n

ECB governors decided unanimously to leave rates at their current level of 2.25% today<\/figcaption><\/figure>\n

No second-round effects yet<\/h3>\n

The key reason the ECB can afford to be patient is that long-feared second-round effects of the energy price spike have yet to materialise.<\/p>\n

High energy costs tend to raise the price of all goods and services and eventually force workers into demanding higher wages, setting off an inflationary wage-price spiral.<\/p>\n

But wage growth is continuing to ease, the labour market is relatively soft – particularly in Germany, the bloc’s biggest economy – and firms surveyed by the ECB are anticipating even more muted pay pressures.<\/p>\n

Consumers have dialled back their price expectations, while detailed figures are showing next to no evidence of second-round effects. Services inflation actually slowed last month.<\/p>\n

Moreover, continuing trade tensions, high energy costs and China’s expansion into some of Europe’s key export markets suggest that the bloc’s industries will continue to struggle for years to come, putting downward pressure on labour demand.<\/p>\n

Policymakers nevertheless argue that even if second-round effects are smaller and delayed, they are still coming and the ECB needs to be ready to act.<\/p>\n

Scorching summer weather in much of Europe this month is also a potential risk.<\/p>\n

The heat may have damaged crops and could push up food prices, while low water levels on key rivers could create shipping bottlenecks.<\/p>\n

‘Captain Lagarde’ says she will stay on ECB ship amid early exit talk<\/h3>\n

Meanwhile, European Central Bank President Christine Lagarde insisted today that she \u2060would still be in her role next year, saying “the captain stays on the ship” while there were clouds on the horizon.<\/p>\n

However, asked to commit to completing her term, which is due to end \u200cin October \u20602027, Lagarde said she did not like to be “boxed in”.<\/p>\n

“I did mention once: when there are clouds on the horizon, the captain stays on the \u200cship, and this captain is staying on this ship,” Lagarde \u2060told today’s press conference.<\/p>\n

“You are not going to see the back of me before 2027,” she added.<\/p>\n

Earlier this month \u2060Lagarde had said it was still possible \u2060she could leave before her term ends to weigh in on French politics, but that running in next spring’s French presidential election was not “currently” on the agenda.<\/p>\n

Additional reporting Reuters<\/b><\/i><\/p>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

The European Central Bank decided to keep interest rates unchanged today, but at their meeting some ECB governors asked whether the bank should hike rates. At a press conference this afternoon, the ECB’s president Christine Lagarde said that the outlook for inflation was “well above target” into the first half of next year. After a […]<\/p>\n","protected":false},"author":1,"featured_media":44645,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ocean_post_layout":"","ocean_both_sidebars_style":"","ocean_both_sidebars_content_width":0,"ocean_both_sidebars_sidebars_width":0,"ocean_sidebar":"","ocean_second_sidebar":"","ocean_disable_margins":"enable","ocean_add_body_class":"","ocean_shortcode_before_top_bar":"","ocean_shortcode_after_top_bar":"","ocean_shortcode_before_header":"","ocean_shortcode_after_header":"","ocean_has_shortcode":"","ocean_shortcode_after_title":"","ocean_shortcode_before_footer_widgets":"","ocean_shortcode_after_footer_widgets":"","ocean_shortcode_before_footer_bottom":"","ocean_shortcode_after_footer_bottom":"","ocean_display_top_bar":"default","ocean_display_header":"default","ocean_header_style":"","ocean_center_header_left_menu":"","ocean_custom_header_template":"","ocean_custom_logo":0,"ocean_custom_retina_logo":0,"ocean_custom_logo_max_width":0,"ocean_custom_logo_tablet_max_width":0,"ocean_custom_logo_mobile_max_width":0,"ocean_custom_logo_max_height":0,"ocean_custom_logo_tablet_max_height":0,"ocean_custom_logo_mobile_max_height":0,"ocean_header_custom_menu":"","ocean_menu_typo_font_family":"","ocean_menu_typo_font_subset":"","ocean_menu_typo_font_size":0,"ocean_menu_typo_font_size_tablet":0,"ocean_menu_typo_font_size_mobile":0,"ocean_menu_typo_font_size_unit":"px","ocean_menu_typo_font_weight":"","ocean_menu_typo_font_weight_tablet":"","ocean_menu_typo_font_weight_mobile":"","ocean_menu_typo_transform":"","ocean_menu_typo_transform_tablet":"","ocean_menu_typo_transform_mobile":"","ocean_menu_typo_line_height":0,"ocean_menu_typo_line_height_tablet":0,"ocean_menu_typo_line_height_mobile":0,"ocean_menu_typo_line_height_unit":"","ocean_menu_typo_spacing":0,"ocean_menu_typo_spacing_tablet":0,"ocean_menu_typo_spacing_mobile":0,"ocean_menu_typo_spacing_unit":"","ocean_menu_link_color":"","ocean_menu_link_color_hover":"","ocean_menu_link_color_active":"","ocean_menu_link_background":"","ocean_menu_link_hover_background":"","ocean_menu_link_active_background":"","ocean_menu_social_links_bg":"","ocean_menu_social_hover_links_bg":"","ocean_menu_social_links_color":"","ocean_menu_social_hover_links_color":"","ocean_disable_title":"default","ocean_disable_heading":"default","ocean_post_title":"","ocean_post_subheading":"","ocean_post_title_style":"","ocean_post_title_background_color":"","ocean_post_title_background":0,"ocean_post_title_bg_image_position":"","ocean_post_title_bg_image_attachment":"","ocean_post_title_bg_image_repeat":"","ocean_post_title_bg_image_size":"","ocean_post_title_height":0,"ocean_post_title_bg_overlay":0.5,"ocean_post_title_bg_overlay_color":"","ocean_disable_breadcrumbs":"default","ocean_breadcrumbs_color":"","ocean_breadcrumbs_separator_color":"","ocean_breadcrumbs_links_color":"","ocean_breadcrumbs_links_hover_color":"","ocean_display_footer_widgets":"default","ocean_display_footer_bottom":"default","ocean_custom_footer_template":"","ocean_post_oembed":"","ocean_post_self_hosted_media":"","ocean_post_video_embed":"","ocean_link_format":"","ocean_link_format_target":"self","ocean_quote_format":"","ocean_quote_format_link":"post","ocean_gallery_link_images":"on","ocean_gallery_id":[],"footnotes":""},"categories":[19,20],"tags":[],"class_list":["post-44644","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-news","entry","has-media"],"_links":{"self":[{"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/posts\/44644","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/comments?post=44644"}],"version-history":[{"count":0,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/posts\/44644\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/media\/44645"}],"wp:attachment":[{"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/media?parent=44644"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/categories?post=44644"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sharewatch.com\/wp\/wp-json\/wp\/v2\/tags?post=44644"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}