The European Central Bank’s July 22-23 meeting minutes indicated that another interest rate hike remains likely at the September 9-10 policy session, as policymakers assessed inflation risks tied to geopolitical tensions.
The ECB held its key rates steady in July, describing the decision as a temporary pause rather than the end of the tightening cycle. Officials emphasized that the move did not signal a conclusion to rate increases, noting that another adjustment could be warranted if inflation pressures persist.
Minutes from the meeting, released on Thursday, also highlighted concerns over the impact of the Iran conflict on energy prices and broader price stability. The ECB’s prior rate hike in June aimed to counteract potential inflationary effects from regional instability.
Corporate lending data released alongside the minutes showed eurozone banks increased business loans at a 4.4% annual pace in July, the fastest expansion in over three years. This followed a June increase in the ECB’s deposit rate to 2.25% from 2.00%, marking the first hike in nearly three years.
Policymakers noted that recent economic indicators, including output and business surveys, suggested the eurozone economy was performing better than anticipated. However, they maintained a cautious stance, with inflation still running near 3%, according to the report.
The ECB reiterated that future decisions would remain data-dependent, with another 25-basis-point rate increase under consideration for September unless incoming data showed a significant improvement in the inflation outlook.
