Many of the discussions will be quite academic of nature. But Lagarde also offered a glimpse of the path forward. She noted that the ECB needs more time to assess inflation uncertainties, and that the strong labour market allows the central bank to gather more data before making a decision. That's July definitely off the table then. However, policymakers still appear relatively confident that they can resume the cutting cycle in September – data permitting, of course.

This morning, the ECB's policymakers will probably be egged on further. The ECB Forum on Central Banking starts with a discussion on the drivers of post-pandemic inflation. The authors of the paper argue "that there are reasons to be optimistic about inflation, both in the immediate and the more distant future." Their model predicts an "easy last kilometre" back to target in the coming quarters.

That's definitely what policymakers want to hear, even though several of their colleagues are warning against cutting rates to hastily from here on. Interestingly, the authors also conclude that the recent episode of high inflation was driven more by a unexpectedly strong demand, rather than just an (energy) supply shock. And consumption is expected to pick up again in the coming quarters; it's unclear whether that is embedded in their projections, or whether such a development could drown out their cheer of an easy last kilometre.

And, while the ECB's rate setters get a peptalk in Sintra, the EUR OIS market has further priced out the odds of rate cuts in the second half of the year.  Part of that was probably a side-effect of the relief rally after investors' worst-case scenarios for the French elections did not play out. That said, incoming inflation data were not very constructive either.

At first glance, the German inflation rate may have given the Governing Council a bit of a confidence boost, ahead of today's estimate for the Eurozone aggregate. The HICP inflation rate cooled from 2.8% to 2.5% y/y in June. However, scratching just a bit below the surface, the picture becomes mixed at best.