ECB to Weigh Rates on July 23 as Euro-Area Inflation Cools

The European Central Bank heads into its July 23 policy meeting having raised interest rates in June for the first time since 2023, lifting the deposit rate to 2.25% in response to inflation pressures stemming from the Middle East conflict and higher energy costs. Since then, price data have offered some relief: euro-area headline inflation eased in June, with Germany slowing to 2.4% and France to 2.0%, while core inflation moderated. Even so, the central bank raised its inflation projections earlier in the summer, now seeing headline inflation averaging around 3.0% in 2026, and trimmed its growth forecasts, citing the war's impact on commodity markets, incomes and confidence. Markets are weighing whether policymakers pause to assess incoming data or signal further tightening, with a renewed climb in oil prices following fresh Middle East strikes keeping the risk of another move alive; some investors see a meaningful chance of a hike in September. The decision will be closely watched across the bloc's largest economies, Germany and France, for its impact on borrowing costs, growth and the euro.