From hawkish cut to dovish hold – Rabobank

The ECB kept its policy rates unchanged, leaving the deposit facility rate at 3.75% and the main refinancing operations rate at 4.25%, senior macro strategist in Rabobank Bas van Geffen notes.

September rate cut remains very likely

“The ECB’s decision to leave rates on hold was moderated by a slightly dovish statement. We believe policymakers are inclined to look through near-term data, unless these materially impact their medium-term projections.”

“A September rate cut remains very likely, even though Lagarde stated that the outcome of that meeting is ‘wide open’. We see upside risks to our deposit rate forecast, but particularly later in the easing cycle.”