Some policymakers had initially left the door ajar to a follow-up cut in July. That door is now shut tight. Incoming data do not require urgent rate cuts; in fact, these data should urge further caution as economic growth and credit are picking up again, Rabobank’s senior macro strategist Bas van Geffen notes.

Incoming data urge caution

“Incoming data do not warrant a follow-up rate cut at this juncture. Rather, they urge caution. This view is widely shared, and virtually no one expects a policy change next week.”

“The ECB’s projections may be too benign. That will not prevent another rate cut in September, but we see upside risks to our deposit rate forecast further out.”