Commerzbank’s Antje Praefcke argues the European Central Bank (ECB) can delay action today but will keep a hawkish tone as inflation stays near 3% and core pressures may even rise. She expects the next rate move to 2.50% in September, with today’s communication likely confirming market pricing, but notes the Euro (EUR) may not gain much unless Christine Lagarde surprises.

September hike remains in view

"Ultimately, therefore, despite a general trend toward lower energy prices, inflation is likely to remain just below 3% in the coming months, while the trend in core inflation may even pick up slightly."

"And finally, the ECB will have the new forecasts available in September, on the basis of which another interest rate hike could follow, provided it continues to be deemed necessary."

"In this regard, it is likely still too early for an interest rate hike today, but we stick to our view that the next move - to 2.50% - will occur in September."

"This would also confirm market expectations of a rate hike in September."

"Conversely, however, this means that the euro is unlikely to benefit much from the ECB meeting, barring any hawkish surprises from Lagarde."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)