ECB MINUTES REVIEW: A non-incremental meeting provided a non-incremental set of accounts

Analysis details (13:05)

In what was a meeting that failed to provide much in the way of fireworks, the account of said meeting proved to be non-incremental for ECB watchers. In terms of the policy discussion, the decision to stand pat on rates was predicated by the judgement that the environment remained exceptionally uncertain, especially because of trade disputes but also owing to geopolitical developments. Additionally, it was also argued that interest rates were already significantly supportive of loan demand and past interest rate cuts had yet to have their full impact, with some transmission remaining in the pipeline. On the trade front, the meeting came just three days before the July 27th trade framework agreement. Nonetheless, the judgement at the time was that the impact of tariffs on inflation would take form via one-off price level effects rather than ongoing inflationary effects. In terms of the broader economic assessment, it was noted that the strong first quarter outcome did not alter the underlying fundamentals, which pointed to ongoing but fragile economic growth. On the Euro, it was observed that there had been "relatively small" pass-through of the exchange rate to inflation. Overall, the account did little to shift the dial for ECB pricing with traders instead focused on upcoming data points to see how the EU-US trade agreement is impacting growth and inflation in the region. 

28 Aug 2025 - 13:05- Fixed IncomeData- Source: Newsquawk