The European Central Bank is looking ahead tonight: "Hawks stay put" is a foregone conclusion?

The European Central Bank is expected to leave interest rates unchanged on Thursday. Deposit rates will remain at 2 per cent, according to forecasts from all 59 economists surveyed by Bloomberg. The new ECB forecasts are likely to show a gradual acceleration in economic growth and medium-term inflation hitting target.

The European Central Bank's governing council, which decides monetary policy on Thursday, is not anticipating a change because of more hawkish members of the council since the summer and generally strong data, with inflation even rising slightly in August. Markets are pricing in only the probability of further rate cuts next year - about 16 basis points of easing in June 2026 have already been accounted for.

The market's current expectations of downside risks are too optimistic. Neither the impact of the Federal Reserve's accelerated interest rate cuts on the exchange rate nor the room for upgrading the US-EU trade framework has been fully appreciated. The political situation in France could also deteriorate further, at least into a situation of market concern. If the European Central Bank takes an overly hawkish stance, it will be tantamount to adding fuel to the fire, which it is desperate to avoid.

HSBC expects the European Central Bank to maintain interest rates unchanged

HSBC expects the ECB to leave interest rates unchanged on September 11, in line with its long-held view and current market expectations. Any change in policy rates would be a huge surprise.

Since the July meeting, economic data have been mixed. August's PMI was slightly better than expected, second-quarter GDP grew by 0.1% quarter-on-quarter (though this figure is likely to be revised downward), while July's inflation data slightly beat consensus expectations. June's trade data, on the other hand, showed a preemptive effect on exports, and the announcement of the French government's confidence vote added to political uncertainty. The European Union's trade deal with the US provides some clarity (despite the 15% tariff), but some uncertainty about the details remains.

The European Central Bank kept its key deposit rate at 2.0% in July, within its estimated neutral rate range. Lagarde, the ECB president, stressed that "we are in a good position" (no further rate cuts, July 24). This further confirmed previous remarks by ECB executive member Schnabel, who said that "the threshold for another rate cut is very high".

Given this tone, the current data do not appear to be sufficient to prompt a change in policy stance in September. HSBC does not expect much change in ECB staff forecasts in September, nor is it likely to be sufficient to prompt a change in policy. However, there have been signs of disinflation since June, such as the appreciation of the euro and US tariffs on the European Union being slightly higher than the ECB's baseline scenario. However,In light of the more modest forecast for June, HSBC does not expect a downward revision in inflation forecasts。

Even so, inflation will most likely remain below the ECB's target of 2 per cent in the coming year and barely reach it until 2027.Any further appreciation of the euro, the continued impact of tariffs, and the risk of execution of the fiscal plan could have an adverse impact on inflation。

European stock markets opened divergent, as the market awaited the move of the European Central Bank

Frankfurt's DAX was trading close to zero on Thursday, trading in a narrow range around 23,640 as markets awaited a monetary policy decision from the European Central Bank and a key US inflation report later in the day.

The FTSE 100 rose 0.5% on Thursday, rebounding from a slight decline in the previous session and outperforming other major European stock indexes. The index's gains were driven by strength in defense, mining and energy stocks.

European stocks edged higher on Thursday, with the Stoxx 50 edging up 0.1 percent and the Stoxx 600 up 0.2 percent as markets await key events later.

Investors in the region will be closely watching the ECB today, despite widespread expectations that the central bank will not adjust its current key deposit rate of 2%. However,Market participants will continue to closely monitor the European Central Bank's latest macroeconomic forecasts for the eurozone and the global economy。

S & P 500 futures were flat on Thursday as Wall Street awaited the late release of consumer price data for August.

Economists polled by Dow Jones expect the index to rise 0.3 per cent month-on-month and 2.9 per cent year-on-year. Excluding volatile food and energy prices, the so-called core CPI is expected to rise 0.3 per cent from July and 3.1 per cent from a year earlier.

The previously released producer price index showed an unexpected decrease of 0.1% month-on-month and an increase of 2.6% year-on-year.

In Asia-Pacific markets, Japan's benchmark Nikkei 225 index hit a record high overnight, echoing an overnight rally on Wall Street.