ECB MINUTES: it was argued that a rate increase would not address the underlying cause of the rise in inflation

RATE STANCE: All members agreed to keep the three key ECB rates unchanged, judging a pause appropriate amid high uncertainty and an incomplete inflationary impact from the energy shock. All members backed unchanged rates provided communication stressed a firm commitment to ensure inflation stabilised at 2% over the medium term. Some noted they would not have opposed a rate rise, as incoming data since June had strengthened the case for further tightening. POLICY OUTLOOK: All members recognised waiting and reassessing in September as reasonable, when new projections and further data on growth, inflation, wages and expectations would be available. All members reiterated a data-dependent, meeting-by-meeting approach, without pre-committing to a particular rate path. All members stressed another rate hike would likely be necessary unless the inflation outlook improved significantly, while avoiding pre-commitment to a September hike. Some favouring further tightening saw little likelihood that another rate hike would prove unwarranted and viewed the option value of waiting as small. Some argued rates needed to move into mildly restrictive territory, seeing current rates as not restraining the economy. INFLATION: All members concluded inflation risks were tilted to the upside, reflecting possible stronger energy shocks, indirect effects, wage pressures, low gas storage and trade tensions. All members broadly agreed incoming inflation information remained consistent with the June baseline, despite sizeable and broad-based downside surprises in headline and core inflation. All members took comfort that most survey and market-based inflation expectations beyond the near term remained well anchored. All members judged inflation remained vulnerable to renewed shocks and upside risks, potentially increased by deteriorating geopolitics and energy supply-chain choke points. All members agreed underlying inflation remained contained, while the full effects of the energy shock had yet to emerge. Some favouring tightening stressed stronger upside inflation risks and warned delayed action could slow the return to 2%, affect expectations and require greater tightening later. GROWTH: All members agreed the global economy was proving more resilient than expected despite Middle East volatility, supported partly by AI-driven investment and trade. All members noted euro-area activity continued growing and remained broadly resilient despite the Middle East conflict, energy shock and elevated uncertainty. All members assessed downside growth risks had become less pronounced as incoming information exceeded expectations and confidence indicators recovered.