Scotiabank expects the ECB to hold rates in July, arguing policy need not move in a straight line during periods of high uncertainty. Markets have priced a 25bp June hike and expect the deposit rate to be left at 2.25% thereafter, with consensus leaning to stand pat in July. ECB President Lagarde said on July 1: "I think the upside risks to inflation and downside risks to growth may be more balanced than a few weeks ago, because things are changing fast." Since then US‑Iran tensions have flared

Scotiabank expects the ECB to hold rates in July, arguing policy need not move in a straight line during periods of high uncertainty. Markets have priced a 25bp June hike and expect the deposit rate to be left at 2.25% thereafter, with consensus leaning to stand pat in July. ECB President Lagarde said on July 1: "I think the upside risks to inflation and downside risks to growth may be more balanced than a few weeks ago, because things are changing fast." Since then US‑Iran tensions have flared and WTI and Brent have each risen roughly $12/barrel. June euro‑area CPI fell 0.1% MoM and core CPI eased YoY to 2.4% from 2.6%, which may give the ECB more time to assess under its data‑dependent framework; market sentiment indicators nonetheless remain overall tilted hawkish.