JPMorgan's View on ECB - FJElite

View Lagarde and Lane's comments and the latest data as consistent with further tightening. We remain comfortable with our forecast of another (and final) hike in September, on growth resilience, both pointed to solid private balance sheets, a resilient labour market, fiscal support (mainly via defence and infrastructure spending) and that companies were investing in new technologies. On inflation, Lagarde and Lane both saw a spillover of the energy shock to underlying inflation and shorter-term inflation expectations. They also noted more benign factors, such as anchored longer-term inflation expectations, an absence of second-round effects in the wage data and that the scale/duration of the shock still looks more benign than in 2022. Lagarde s comment that a “forceful" interest rate response was not needed does not, in our view, rule out 1-2 further hikes.