The European Central Bank is likely to leave rates unchanged on 23 July. Consensus is unanimous and markets are pricing less than a 5% chance of a hike. That fits the natural progression from June’s hike, which was largely driven by higher energy prices, and felt more like an ‘insurance’ move than the start of a tightening cycle. Still, the stream of geopolitical and energy-market headlines since then means that a surprise hike should not be fully ruled out, in our view. Among the more realistic hold scenarios, our baseline remains hawkish-leaning. Without updated economic projections, the communication will have to ... (full story)