Notes for a TV interview before the ECB Press conference of September 10 2026

• Near unanimous view that the deposit rate will be brought to 2.5%

• Latest developments:
Resilient growth: latest GDP development and favourable PMI-EC sentiment indicator. Growth close to potential in 2026 and possibly even a little higher in 2027-2028. This is remarkable given all the shocks hitting the €-area economy. The evidence is compatible with a somewhat higher r*: monetary policy is not restrictive.
Contradictory developments on inflation:
Better developments in 2026 but expected to worsen in 2027, both headline and core. Assessment depends on the horizon: Good short term but not reassuring in the medium term?
Reassuring wage developments (3.4-3.2 wages; 2.7-2.3 ULC), but latest oil and gas developments.
Wage developments seemingly under control are even more important given the still very low unemployment. Has the ECB managed to reassure workers about their real wages with the post-Ukraine late but forceful tightening?(https://www.bruegel.org/working-paper/did-2022-energy-inflation-surge-dent-european-central-bank-and-fed-credibility)
Expected inflation under control (inflationary expectation control as a more timely credibility test than keeping actual inflation on target.)

• One more rate increase?
A bit ritualistic and stale “meeting by meeting”.
On one hand, on the other hand…
Meaning of data-dependent approach? Beauty is in the eyes of the beholder. Data are critically important, but they only speak when set in an interpretation framework, a narrative, as it is often said.
My judgement is that prospects are not symmetric: if there is no bad news, rates will not change; there is no need for good news for this. But, of course, Iran and the US, as we see these days, are very capable of producing bad news.
I find central expectations of 1 and even more 2 further rate increases a bit overdone unless negative developments intrude.
I don’t think anyone can have a definite view of what could happen in 2007 in terms of rates and, I would add, this is not the most important issue. Geopolitical developments are much more important and uncertain.

• On the US? I do not expect, for obvious reasons, comments from Lagarde on potentially the most important issue: the vulnerable situation in the US, with fiscal sustainability in doubt, tariffs coming and going, continued Trump pressure on the FED, erosion of the $ based international monetary system. A little pride would be justified, as the ECB is in a better situation than the FED: better inflation control, no Trump pressure, no unsustainable fiscal situation. But, of course, Lagarde cannot indulge in it.