The ECB's September staff projections could well show inflation heading back to target without the need for a further interest rate hike, but too much importance shouldn't be placed on one meeting or one set of outlooks, the central bank's account of the July policy meeting show. Whatever decision is to be taken in September, data would be the key driver, the account confirmed. (MNI SOURCES: ECB Mulls September Hawkish Pause, August CPI Key)

The Governing Council was unanimous in supporting a 25bps hike in the benchmark rates, a move that pushed the deposit rate to a joint euro-era high at 3.75%. However, there had been initial calls from some policymakers to hold rates at 3.5% at the July meeting.

Inflation was still seen as a major concern, a counter argument suggesting that 'rates had to cover more ground to bring inflation back to target, in particular if inflation did not decline as quickly as expected". Therefore, the argument went, a further rate hike in September would be necessary 'if there was no convincing evidence that the effect of the cumulative tightening was strong enough to bring underlying inflation down in a manner consistent with a timely return of headline inflation to the 2% target.'