Both the Bank of England and the European Central Bank left their benchmark interest rates unchanged today, but CIBC World Markets sees a possible hike by the ECB in the future.

At today’s meeting the Governing Council of the ECB decided that the minimum bid rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 2.75%, 3.75% and 1.75% respectively, it announced.

CIBC notes that the ECB’s president Jean-Claude Trichet has clearly hinted at a likely 25 basis point rate hike on August 3, “implying that the ECB is accelerating the pace of its monetary policy normalization process.”

“Indeed, the key vigilant word was used on several occasions today, both in the official ECB statement and in the Q&A session. This is the sort of policy language endorsed by the ECB in the month preceding a rate hike and this, right since the beginning of the tightening cycle, so there is consistency there,” it explains.

As for the size of the rate hike, CIBC says that it believes that it is clear from the tone of the Q&A session that for now, the ECB will stick to 25 bps moves. “The ECB paints a healthy growth outlook with continued upside inflation risks identified, nothing surprising/controversial in this assessment,” it concludes. “After this press conference, we can confidently conclude that the ECB will deliver a 25 bps hike on Aug 3rd but that’s not a shock.”

Also, the Bank of England’s Monetary Policy Committee today voted to maintain the official Bank rate paid on commercial bank reserves at 4.5%. Its change in interest rates was a reduction of 25 bps to 4.5% back in August 2005.

CIBC says that the stand pat stance of the BoE was expected, and is likely to be maintained for the foreseeable future. “This was the eleventh consecutive unchanged policy outcome and we expect the policy of wait and see to continue for some time to come,” it says.

There was no policy statement accompanying the rate decision, as it was not controversial. CIBC says that, “Recent policy language at the MPC suggests that if anything, the incline remains towards policy tightening but the rather mixed nature of domestic and international economic news implies that the BoE can easily afford to wait and see for a while longer. There is no sense of urgency (if any need at all?) on the rate hike front in the UK.”