ECB Ready to Raise Interest Rates Again Amid Resilient Euro Zone Economy

European Central Bank policymakers were already anticipating another interest rate hike when they met in July. The decision to hold rates steady was seen as a 'pause' rather than the end of the tightening cycle, according to the ECB's account of the meeting.

The ECB had raised interest rates for the first time in nearly three years in June to combat the impact of the Iran conflict on energy prices. With inflation at nearly 3% and the economy showing signs of resilience, policymakers were ready to raise the policy rate again, this time to 2.50% from 2.25%, on September 9-10.

ECB board member Isabel Schnabel emphasized that data would determine how much further borrowing costs would need to rise. The latest output data and business surveys showed the euro zone's economy was doing better than expected, suggesting the ECB's effort to rein in price hikes was not putting undue strain on activity.