The European Central Bank maintains fixed interest rates on Thursday as economic uncertainty continues to be following the aggressive tariff agenda by Donald Trump.
Before the decision, the markets were pricing at an opportunity about 99 % of the main deposit rate of the European Central Bank by 2 % for the second time in a row. The central bank reduced the last rates in June, which led to a decrease in prices from last year’s record High From 4 %.
“Currently inflation is about 2 % of the average target of 2 %, and the Governing Council’s evaluation of inflation expectations is unchanged on a large scale,” the European Central Bank said in a statement.
The Central Bank added that it will follow an approach for each meeting separately, and it depends on the data and was not previously obligated on a specific path of interest rates. The European Central Bank provided a few references to the future direction of the rates.
Economic uncertainty
The European Central Bank is wrestling with global economic uncertainty, despite inflation in the eurozone Hover The central bank’s goal is 2 % in recent months, and the European Union Beating With the United States
Atlantic partners Agreed To 15 % a blanket tariff for European Union exports to the United States in July, with more details about the emerging framework last month. She took some questions for the main European sectors, such as medications.
but, Questions remain Since some issues – such as the provisions of the wine and lives sector – were left open. Fears also grew on more customs tariffs after Trump threatened revenge against the European Union after he was hit alphabetGoogle at $ 3.45 billion Anti -monopoly is fine.
There are still concerns about the tariff for economic growth. The growth in the euro area remained slow even with the low prices, with the latest Numbers Only 0.1 % shows growth in the second quarter after 0.6 % expansion in the previous period.
“The risks of economic growth have become more balanced,” Lagarde said on Thursday.
She said: “While the recent commercial agreements have reduced uncertainty, renewing the exacerbation of commercial relations may lead to an increase in export exports and is subject to investment and consumption.” Lagarde also pointed out that “the inflation view is still more uncertain than usual as a result of the commercial policy environment that is still volatile.”
In response to a question from Annett Weisbach from CNBC, Lagarde added that the uncertainty in trade “clearly diminishes” with risk of risk such as European revenge against American policy. But Lagarde said that uncertainty was not to “normal” levels before acidity, adding that “perhaps there will be no normal level.”
More cuts forward?
Economists and analysts have appeared divided on whether they would expect more price cuts in the future.
“The central bank” is not in a hurry to reduce rates. “
But he pointed out that “a 15 % tariff for European Union’s exports to the United States, along with the increasing uncertainty, will affect the demand, which may leave the door open to lower prices at the end of the year.”
“A mixture of strike for investment and exports, the stronger euro along with cheaper imports than China can reduce growth and inflation enough to justify another rate later this year,” Bug explained in a note.
Elsewhere, Irene Lauro, an economist in the eurozone in Sharoder, said on Thursday’s advertisements “our point of view confirms that the mitigation course has ended.”
Lauro believes that the uncertainty is fading and accelerating the economic recovery in the euro area, as companies have become less cautious and the labor markets are still narrow.
She said: “The risks have turned into the euro area from the uncertainty to political instability, as France is now in the financial spotlight. But the flexibility of the economy and the promotion of domestic demand means that the European Central Bank can maintain monetary policy without change.”
Updated expectations
With the expected interest price decision on a large scale, attention on Thursday focused on the press conference of Lagarde and the latest expectations for inflation and economic growth. The central bank has updated its economic forecast in June.
The central bank said, “The expectations of the new European Central Bank employees provide a picture of inflation similar to that expected in June. They believe that the main inflation is 2.1 % in 2025, 1.7 % in 2026 and 1.9 % in 2027.”
In June, inflation for the title was expected to reach 2 % this year, 1.6 % next year and 2 % in 2027.
The so -called basic inflation, which expels the costs of food and energy, will range 2.4 % this year, unchanged from the previous estimate.
Given economic growth, the European Central Bank said that “the economy is expected to grow by 1.2 % in 2025, it has been revised from 0.9 % expected in June.”
Expectations were cut for 2026 to 1 % growth.
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