TD Securities Sees ECB Rate Hike as Base Case in September

TD Securities remains confident that the European Central Bank (ECB) will raise interest rates by another 25 basis points in September, making it their base case scenario. The firm's analysts point to persistent inflation above the ECB's 2% target and hawkish commentary from policymakers as key drivers behind this expectation.

The decision by TD Securities is grounded in the ECB's ongoing battle against inflation, which although moderating, remains a concern. The central bank has already raised rates at its past nine meetings, and recent statements from Governing Council members suggest a continued bias toward tightening despite growing concerns about economic growth.

According to TD Securities, the resilience of the euro area labor market and the gradual pass-through of earlier rate increases to the real economy also factor into their outlook. The firm acknowledges that the path is data-dependent, but as of now, the balance of risks points to another move in September.