In a radio interview over the weekend, Pierre Wunsch, a hawkish member of ECB Governing Council, signaled that more action may be needed to address the issue of “very persistent” inflation in Eurozone.

“I’m inclined to say we maybe need to do a little bit more,” Wunsch stated on Belgian public radio, leaving the door open for additional monetary policy adjustments.

Wunsch clarified that it’s too soon to talk about a complete stop in tightening. He added that he does not expect inflation to come back to ECB’s target of 2% before 2025.

In a cautious tone, ECB Vice President Luis de Guindos said yesterday that “For September, the decision is open,” dropping no hint on whether the central bank would deliver another rate hike, or pause.

Nevertheless, de Guindos was clear about the new economic projections to be published at the September meeting. He noted, “forecasts for economic growth are worse than we had projected in June, while inflation projections are similar to what we had in June.”

De Guindos added that the ECB is “entering the final stretch” of its tightening cycle. He put emphasis on second-round effects and inflation expectations as the factors for any future monetary policy decisions.

According to the minutes, all members supported the 25 basis point rate increase. Nevertheless, some members expressed a preference initially for not raising key ECB interest rates further, citing risks of stronger-than-anticipated transmission of rate hikes into the economy.

Interestingly, the account captured diverging views on the necessity for another rate hike in September. On one side, it was argued that if inflation did not decline as swiftly as expected, interest rates would need to be adjusted further to ensure a timely return to the 2% target.

On the other side, some members posited that the September ECB staff projections could potentially show a downward revision in the inflation path, making another rate hike in September unnecessary.

ECB Governing Council member Robert Holzmann said he has yet to make a decision about the upcoming September meeting but pointedly did not rule out the possibility of an interest rate hike.

“We are not yet at the highest level; it could be that we do another hike or two,” Holzmann commented, offering a glimpse into his thoughts on the current stance of ECB monetary policy.

However, Holzmann also put forth a scenario that could lead to an earlier-than-expected easing of rates. “If we were to move this year to above 4% … and inflation comes down, then we could be able, perhaps, to change it already to lower rates in 2024. If that’s not the case, we’ll have to wait for 2025,” he said.