23 July 2026
If you are covering the European Central Bank's decision to leave interest rates unchanged, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Having been the first major central bank to raise interest rates last month, the ECB has hit the pause button once again and left rates unchanged. This will come as no surprise as any subsequent rate rises are likely to be gradual in nature. The ECB is at a much more comfortable starting point than the Federal Reserve and the Bank of England, and as such can be a little more cautious in acting depending on the data.
“That economic data has been relatively benign of late following the initial ceasefire in the Middle East. This can give comfort to policy makers that they won’t misstep by choosing to hold, while still keeping the door ajar for further rate rises. Indeed, with oil once again spiking following a renewal of tensions between the US and Iran, and the knock-on effects for inflation, the ECB may need to use that breathing space when they next meet in September to raise rates and look to keep a lid on inflation.
“Indeed, despite its ability to hold rates today, the market still expects the ECB to be in a rate raising mood for the rest of the year. Clearly how aggressive it is in upping interest rates depends broadly on what is happening away from the continent, and that is making the job of the policy committee incredibly challenging.”
