Overview
- The ECB is expected to keep the deposit rate at 2.25% on Thursday, July 23, after raising rates by 25 basis points in June.
- Euro‑area inflation was 2.8% in June and an ECB survey of more than 5,000 firms shows firms expect roughly 3% inflation in coming years, which keeps upside pressure on policy.
- Escalation in the Middle East has pushed oil prices higher and prompted companies to shift suppliers and boost energy measures, creating a clear channel for higher headline inflation.
- Any benefit for savers will likely arrive slowly because banks do not automatically pass higher central bank rates to customers and retail offers depend on bank competition.
- Mortgage borrowing costs are tied more to long‑term bond yields and inflation expectations than to the deposit rate so a July pause would not automatically cut home loan rates.