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As expected, the European Central Bank strengthened its forward guidance regarding interest rates at its July 22 Governing Council Decision. The decision was the first after their announcement of a more dovish monetary policy strategy on July 8. The Governing Council now “expects” to keep interest rates at current or lower levels until two criteria are met: First, their economists must forecast inflation reaching 2% “well ahead of the end of [the ECB’s 2-3 year] projection horizon,” and staying “durably” at or above 2% through the end of the projection. President Lagarde clarified in the post-decision press conference that “well ahead” means the midpoint of the projection. Second, core inflation should rise substantially from its current 1% level: They want to see “realized progress in underlying inflation… sufficiently advanced to be consistent with” 2% inflation over the medium term. Governing Council members no doubt disagree about how much core inflation must rise, but a good guess is that it would have to exceed 1.5% in year-ago terms for a quarter or two before a majority of Governing Council members would consider a rate hike.