It is very much a placeholder meeting as the ECB has made it clear that they will not cut rates today. Instead, policymakers have been teeing up the idea of the next move coming in September. So, this will be a slight pause following the rate cut in June.

As such, there will be very little to scrutinise in the decision later. The narrative now is that the ECB is still reaffirming that policy is restrictive enough after the first rate cut. And that they are waiting to gain more confidence in the months ahead on the disinflation process.

In fact, the latter was already part and parcel of the equation in June as evident by the meeting accounts here. The governing council ended up supporting Lane’s proposal to cut key rates by 25 bps but there were quite a number of reservations put forward with regards to the inflation outlook.

So, those same reservations i.e. stronger services inflation and wage pressures, will be used as reasons for them to stay on the sidelines today.

I wouldn’t expect much from Lagarde either as it would not be prudent to pre-commit to a move in September. That would be a big misstep on her part if it happens. As poor as she has been in some of the pressers before, I don’t see her pulling off such a miscommunication this time.

It will be pretty much ensuring that September remains live with a strong probability of cutting again if things continue to trend accordingly. But at the same time, reaffirming that they have the flexibility to react to any surprises in the data.

The best way in telling that they did the job right today will be to observe minimal reaction in the euro itself.