Ella 
Hawkish (5%): 25 bps rate hike, favoring a September rate hike
There were no substantive changes in resolutions compared to June. 25 basis points of interest rate hike, balance sheet policy unchanged. President Lagarde suggested that the base case should be a rate hike in September and the data must prove otherwise. EUR/USD rose 0.25%.
Base case (70%): 25 bps hike, wording cautious
There were no substantive changes in the decision compared to June. 25 basis points of interest rate hike, balance sheet policy unchanged. Lagarde remains ambiguous on policy for September – the governing council will raise rates if data supports it. That’s not to say the data was a surprise compared to the June forecast, but rather a broader statement blaming macro dynamics for the case for rate hikes. Lagarde said policy moves after September depended entirely on data. EUR/USD fell 0.15%.
Dovish (25%): 25 bps rate hike, high bar for further hikes
There were no substantive changes in the decision compared to June. 25 basis points of interest rate hike, balance sheet policy unchanged. Lagarde made it clear that to raise rates in September, the data would have to surprise upwards (compared to the ECB’s June forecast). In other words, while it’s not impossible, the bar is relatively high. She didn’t say the ECB had hit cap rates, but that was the implication. EUR/USD fell 0.75%.
