Despite attempts to highlight that further hikes are still possible, the formulation in the press release suggests strongly that the goal now is to keep rates at these levels for long enough. Unfortunately, in our view, stating this so clearly raises the risk that markets will now increasingly focus on the timing of the first cut, especially as inflation is likely to come down and growth remains sluggish. 

The immediate impact on long-term yields and the Euro could imply a more delayed return to price stability, paradoxically raising the need of further rate hikes. 

We do not expect any more hikes by the ECB this year, although we still see mainly upside risks to inflation, and instead look forward to the discussion on balance sheet normalisation by year-end. 

With slightly accelerated QT, there should be room to push the yield curve steeper, thereby also supporting price stability. However, we also see a clear risk that high unit labour costs will result in sticky core inflation, which the ECB may need to react to with rate hikes next year.