Economists at Nordea share their view on the European Central Bank's (ECB) policy outlook following the release of the July Monetary Policy Meeting Accounts.

ECB will pause hiking in September, while retaining a tightening bias

"The monetary policy account from the ECB’s July meeting did not offer much guidance on what the ECB would do at its September meeting."

"The activity data since the July meeting has been weak, while inflation has proved to be sticky. In fact, stagflation risks were mentioned twice in the account. A few of the more hawkish Governing Council members have talked in favour of another hike lately, while most, including Executive Board member Schnabel today, have kept an open mind."

"We stick to our long-held baseline that rates have peaked at 3.75%, and think the ECB will pause hiking in September, while retaining a tightening bias. It will be a close call, though, and there may be an intense battle ahead between those in favour of hiking and the ones wanting to keep rates unchanged at the ECB’s September meeting."