Economists at the Bank of America analyze how the expected a 25 bps hike by the ECB in the upcoming meeting could impact the Euro.

Emphasis remains on underlying inflation, making a September hike a possibility

A 25 bps increase on all three rates by the ECB is expected, which the market has already priced in.

Given the steady outlook since June, significant directional guidance is not anticipated.

Despite some optimistic undertones, the ECB's primary concern remains underlying inflation, keeping the prospect of a September rate hike alive.

The imminent hike has been fully accounted for by the market, and with the ECB's reluctance to firmly commit for September, any significant impact on the EUR is not expected. The currency remains primarily influenced by data.

See – ECB Preview: Forecasts from 12 major banks, the final 25 bps?