European Central Bank policymakers don’t generally expect evidence that stubborn inflation is easing to be clear enough for them to pause the longest streak of interest rate hikes in the ECB’s history this summer, sources told Reuters.

Conversations with seven rate-setters at the ECB’s annual forum in Sintra, Portugal, showed most expected to increase borrowing costs again at both its July and September meetings despite signs the euro zone economy is flagging.

The ECB raised its interest rates to their highest level in 22 years this month and said a ninth consecutive rate hike was all but guaranteed in July as it predicted inflation would stay above its 2 per cent target through the end of 2025.

Of a group of policymakers who have consistently called for rate hikes in the last year, only one, speaking on condition of anonymity, opened the door to a pause in September after recent data showed inflation and economic activity slowing.

The others, speaking on- or off-the-record, said a hike at the ECB’s Sept. 14 meeting, taking the deposit rate to 4.0 per cent, was more likely than not as measures of underlying price pressures remain elevated.

An ECB spokesperson declined to comment.

“I believe we need to see a decisive decline in underlying inflation before stopping monetary tightening,” ECB policymaker Madis Mueller said. “We have seen a small decline in core inflation already, but we need more evidence of a changing trend in inflationary pressures.”

A common argument among the majority pushing for even more hikes was that raising rates too far was less risky than stopping early, which would then require the ECB to jack up borrowing costs even more painfully further down the line.

“If we haven’t done enough, then the problem is that inflation will have become more rooted in, and there’s a risk that it rebounds,” Latvian central bank governor Martins Kazaks said. “And then we’ll need to come back with a vengeance with much stronger rate increases.”

These so-called hawks were emboldened by ECB President Christine Lagarde’s speech on Tuesday, in which she outlined a lengthy fight against high inflation “come what may”.

Investors ramped up their bets on the ECB raising its deposit rate to 4.0 per cent by the end of the year after Lagarde’s speech and pushed out expectations for rate cuts to late 2024.

The hawkish majority cited the risk that high wage growth would stretch into next year, that companies would continue to pass on higher costs to customers and that households’ expectations for future inflation stabilised above the target.

Policy “doves” pushed back, saying the ECB should focus on the medium-term outlook for inflation rather than the latest reading and let its past rate hikes work their way through the economy before adding more.