The European Central Bank (ECB) held interest rates steady at 2% on Thursday, pausing its .
The decision came after a series of eight cuts — seven of them consecutive — since June last year as policymakers await clarity on Europe’s future trade ties with the United States.
Why has the ECB stopped interest cuts?
While the European Central Bank has managed to bring down consumer prices that surged after the pandemic and Russia’s 2022 invasion of Ukraine, officials now face a fresh challenge — rising US tariffs under President Donald Trump.
With inflation now back at the bank’s 2% target and interest rates halved since June 2024, monetary policymakers also said there was no urgency to adjust further at present.
Bank officials said trade tensions made the economic environment particularly hard to predict.
“The environment remains exceptionally uncertain, especially because of trade disputes,” the ECB said amid the ongoing tariff negotiations.
They offered no hints on when the next move might come.
Was the ECB’s decision expected?
The announcement had been widely expected, particularly because inflation was on target for June.
After the last policy meeting on June 5 ECB President Christine Lagarde said the central bank was “getting to the end of a monetary policy cycle.”
With signs of economic activity looking reasonably healthy, the ECB can afford to wait until the outcome of transatlantic trade talks becomes clearer.
New US tariffs on European goods could squeeze exporters by forcing them to raise prices for American consumers or absorb the added costs through lower profits.
Either outcome would reduce export earnings and weigh on Europe’s economy, potentially strengthening the case for another European Central Bank rate cut in September.
This breaking news story is being updated. Refresh your browser for more!
The post ECB holds rates at 2%, pauses easing cycle appeared first on Deutsche Welle.
