So markets were expecting the ECB to keep rates on hold at 2% at their September meeting. And that's exactly what they delivered. It was also an opportunity for the ECB to present updated staff forecasts. On the face of these, they looked a little bit more dovish with the staff revising down their forecast for inflation in 2027 to below the 2% target.

But our view is that President Lagarde's press conference was at the margin quite hawkish, and particularly she emphasized that the disinflationary process was over. And she downplayed the 1.9% in the updated inflation forecast as saying this was a big 1.9%. And moreover, reflected the lagged effects from exchange rates. So the bottom line is, we see this September meeting as confirming our view of no change to ECB policy rates this year.

A small change in 2026 before rates rise again in 2027 as fiscal momentum takes shape.