📝ECB September Rate Hike Is Base Case Scenario: BNP Paribas

Another rate hike expected, likely in September. At this stage, forward-looking price indicators (European Commission

surveys and PMIs) confirm a gradual transmission of the energy shock to other sectors. However, the transmission remains less

significant than what was observed in 2022 and still only marginally affects finished goods. The emergence of a price-wage spiral appears, for now, unlikely, as wage pressures should remain contained in 2026. The ECB anticipates a slowdown in

compensation per employee growth to 3.2% in 2026, followed by stabilization at that level in 2027–2028, consistent with the 2%

inflation target. In this context, we maintain our scenario of one additional 25 bp rate hike, most likely in September, followed by

a plateau in 2027. - BNP Paribas