The broad-based moderation in inflation, with headline inflation falling back below 3% in June, reinforces the case for the European Central Bank (ECB) to leave interest rates unchanged at its July meeting.
Our expectations:
- Following June’s 25 basis point increase, we expect the ECB to keep the deposit facility rate unchanged at 2.25%.
- The Governing Council is likely to reiterate that future policy decisions will remain data-dependent, while avoiding any guidance on the future path of interest rates.
- President Christine Lagarde may also confirm that discussions are under way on raising the minimum reserve requirement, which has remained at 1% since 2012.
Conclusion:
Against a backdrop of persistent geopolitical uncertainty, we expect the ECB to remain cautious over the summer while keeping the door open to another rate hike in September.
Source: Bloomberg, figures as at end-June.
Completed 17/07/2026. This commentary is provided for information purposes only. The opinions expressed by Crédit Mutuel Asset Management are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. The information contained in this publication is based on sources we believe to be reliable. However, we do not guarantee its accuracy, completeness, validity, or relevance. Published by La Française Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. Crédit Mutuel Asset Management: 128 Boulevard Raspail, 75006 Paris is an asset management company approved by the Autorité des marchés financiers under n° GP 97 138 and registered with ORIAS (www.orias.fr) under no. 25003045 since 11/04/2025. Public Limited Company (Société Anonyme) with share capital of €3,871,680, RCS Paris n° 388 555 021, Crédit Mutuel Asset Management is a subsidiary of Groupe La Française, the asset management holding company of Crédit Mutuel Alliance Fédérale.
