Deutsche Bank previews the July ECB policy meeting on Thursday

"A pause in July is expected. Current oil prices remain below 11 June levels, and the June HICP inflation data, which came in softer than expected, cast some doubt on the rapid emergence of indirect inflation. Furthermore, our June dbDIG survey indicated a complete unwinding of the initial energy shock's impact on household inflation expectations. Waiting until September will provide the ECB with two additional HICP prints and updated staff forecasts, enabling a more informed decision," DB notes.

"We continue to anticipate a second and final hike to 2.50% in September. In the July press conference, we expect the ECB to maintain neutral communications. This implies no explicit forward guidance, emphasizing a data- dependent, meeting-by-meeting approach without pre-committing to a specific policy path. While the communication will be neutral, we believe the ECB's tone on inflation will still convey a hawkish stance, consistent with a further 25bp hike in September being highly probable," DB adds.