ECB Rate Hike Case Gains Momentum on New Economic Data

ECB policymakers are re-evaluating their stance on interest rates after new economic data suggested that a rate hike in September may be warranted. According to ING, recent minutes from the European Central Bank's July meeting combined with improved economic indicators strengthen the case for an increase.

Carsten Brzeski, global head of macro at ING, noted that some policymakers would not have opposed raising rates in July, citing evidence that acting earlier can be less costly. However, the Governing Council ultimately decided to move slowly and preserve the option value of waiting to see how conditions evolve.

The ECB is struggling with how to react to supply-side shocks, but the latest data suggests that the eurozone has shown resilience despite the Middle East conflict. This is partly due to Asian competitors being hit harder by the closure of the Strait of Hormuz.