Complete script, yes. But also a broken taboo. The European Central Bank (ECB) yesterday raised the price of money for the ninth consecutive time. Consequently, the interest rate on the main financing operations and the interest rates on the marginal credit facility and the deposit facility will increase to 4.25%, 4.50% and 3, 75%, respectively. It is the highest level in the last two decades, since May 2001.

In its note, the ECB explains that the nightmare of inflation has not gone away yet. “Developments since the last meeting support the expectation that the inflation rate will continue to decline for the remainder of the year, but will remain above target for an extended period. Although some indicators show signs of moderation, the underlying remains at generally high levels”.

However, unlike previous meetings, a certain change of tone was discernible. “Today, having reached this point, I would not say that there is more to go”, said the president, Christine Lagarde. He hastened to say that everything will depend on future data, it is true.

Even so, a word appeared for the first time that had almost disappeared in the last year, since the restrictive cycle of monetary policy began. And that word is pause. “At the next meeting in September, the rates can go up. Or there may be a break, with an extension to be determined. Without a doubt I tell him that we categorically rule out that there will be a cut”, explained the former French minister.

During the press conference, it was discussed whether this step beyond the ECB was producing effects in the real economy. The paradox was that the bad news (the PMI index in contraction, stagnant retail sales and industrial production in year-on-year decline) could constitute good news because they anticipate a slowdown in inflation. A cynical game of “the worse, the better”, but which must be put in its context.

It is enough to think that the CPI in the Eurozone (5.5%) is still higher than the price of money. And that the underlying, that is to say, the one that does not consider the most volatile elements, is anchored at 5.4%.

There was also an interesting allusion to climate change (with the fires punishing Europe), which could be a negative factor that would propel food inflation higher than expected. The classic unforeseen that could spoil the end of an already written script.

“Broadly, in a similar vein to the Fed, the ECB is willing to do more, but also clearly believes it is close to, if not already in, its landing zone,” he says in a note Charles Diebel, head of fixed income at Mediolanum International Funds (MIFL).

In fact, in recent days a change of mood was perceived in the palaces of Frankfurt. The Dutch Klaas Knot, considered a hawk and a supporter of the hard line, declared at the beginning of July that raising rates beyond this month “would be a far stretch of a possibility, but by no means a certainty”. As the Ebury analysts asked themselves, “Are the hawks changing their plumage?”.