People familiar with the matter have indicated that European Central Bank officials are preparing to raise interest rates in September, unless there is a significant improvement in the eurozone's inflation outlook.
These individuals stated that, based on current information and data, particularly the impact of the Middle East conflict and its economic consequences, the ECB may need to raise rates by another 25 basis points to curb inflationary pressures. The sources spoke on condition of anonymity because the discussions were not public.
They emphasized that no final decision has been made, and the situation could change rapidly, especially if progress is made on a peace agreement or if the economy experiences a sharper downturn.
A spokesperson for the ECB declined to comment on the Governing Council's policy plans.
ECB President Christine Lagarde paved the way for a possible September rate hike on Thursday. She stated that before the Governing Council ultimately decided to keep the deposit rate unchanged at 2.25%, some members had questioned whether immediate action should be taken.
"Some members asked themselves whether we should consider a rate hike," Lagarde told reporters in Frankfurt on Thursday. "Our current policy stance is sufficient to allow us to wait and closely monitor developments and incoming data over the coming weeks."
Lagarde told reporters, "There are upside risks to the inflation outlook. Energy shocks could intensify further, and their impact on other prices and wages could be stronger than currently anticipated. The longer energy prices remain high, the more likely they are to push up broader inflation."
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