ECB Edges Closer to September Rate Hike Amid Rising Inflation

The European Central Bank (ECB) has been sending signals that it is leaning towards raising interest rates in September, according to the minutes of its July meeting. President Christine Lagarde mentioned that some ECB members wanted a rate hike, even though they ultimately decided to keep rates unchanged. The minutes shed more light on this debate and, combined with recent economic developments, strengthen the case for a September rate hike.

The minutes highlight that there is still high uncertainty but growing awareness of resilience in the economy. Kansas City Federal Reserve President Jeffrey Schmid also weighed in, saying that inflation remains too high, although he did not call for an interest rate hike. Inflation has proven resilient and 'it's still stubborn', according to Schmid.

Additionally, recent macroeconomic data points to a September rate hike being more likely. The Tokyo core consumer prices rose 1.8% in August from the previous year, creeping closer to the Bank of Japan's 2% target. This suggests broadening price pressure tied to the conflict in the Middle East.

The ECB has been closely watching economic developments before making a decision on interest rates. The minutes of the July meeting and recent data suggest that a September rate hike is becoming increasingly likely.