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President of the European Central Bank Christina Lagard at the 2025 European Central Bank forum on the Central Bank on June 30, 2025 in Sintro, Portugal.
Horacio Villalobos | Corbis News | Gets the image
The European Central Bank retained interest rates on the background of serious economic uncertainty as the European Union overcomes Negotiations on a trade agreement from the US to the end of the month.
This year, ECB reduced interest rates at each of the four meetings, taking a key deposit facility from 3% in January to 2% in June. Last year, it reduced the record high 4%.
“The environment remains exclusively uncertain, especially because of the trade dispute,” the ECB said, adding it inflation and growth forecast from June Remained with the support of the latest data.
While the annual inflation in the euro area has been hit by the Central Bank 2% target last monthThe merchants were widely expected in July – to a large extent from the geopolitical volatility. US – EU the biggest Bilateral trading and investment partner and 27-member block exported 503 billion euros ($ 590 billion) of goods in the States last year.
As of Thursday, the future of these trade relations remained in the air, with One of the opportunities – 15% of the base rate On all EU imports in the US, as well as measures taking into account the EU.
The ECB representatives have now suggested that their work on inflation is practically done, as he hunting the so -called neutral level, at which rates do not stimulate or limit growth. Chief Economist ECB Philip Lane said CNBC Earlier this month, “the last cycle will be made, which reduces inflation”, but the policy will remain alert about any changes in the medium -term forecast.
In the press conference after the decision, ECB President Kristina Lagard said the Eurozone economy has spoken Better than expected in the first quarter. This was partly due to the exports over the expected tariff campaigns, but also because of stronger private consumption and investment, real income growth and simpler financing conditions, she said.
Emphasizing the current level of uncertainty in predicting, logard continued to say that the risks of growth were “tilted to lack”, escalation in trade tensions, which potentially led to export, investment and consumption, as well as weighing business and home sentiment.
Conversely, rapid permission in trade tensions, along with higher European protection and infrastructure costs, can increase growth more than predicted in the coming months, she said.
Investors sought to evaluate, or concerned with the Central Bank recent Thank you in the euroWhich can have a deflationary effect as imports become cheaper.
Lagarda said on Thursday that a stronger euro could “reduce inflation further than expected”, and that higher world tariffs could be reduced at the same time if countries with excess power are overcome by their Eurozone.
However, she again emphasized that the ECB monitors the lapel scenario, in which the fragmented supply chains hold back the domestic economy and push prices around the world. According to her, higher financial costs and extreme weather events also risk inventing inflation, calling the current situation as “wait and see”.
After the decision of the ECB ECB, it was conditioned by trading 0.15% below the US dollar at 14:11 in London at $ 1.175. This is still resolved from the rate of about $ 1,026 at the beginning of the year as investors widespread from the green lapel Due to political and financial uncertainty.
EUR/USA course.
“We can see another (rate) at the end of this year, but the ECB expects whether you can avoid the threat of tariffs by 30% on EU goods since August 1,” Joe Nelis said on Thursday, an economic advisor in accounting.
“If the transaction with the United States-EU is not reached in advance, then in September the ECB may again consider reducing rates to resist the barriers for economic growth that will impose tariffs.”
Mark Wall, Chief European Economist Deutsche Bank, said the ECB will keep all the options on the table – which can even mean a return to hiking to the horizon.
“When the uncertainty of trade fades, the combination of a sustainable economy and significant relaxation will eventually lead to an inverted risk to inflation. Markets are not far from moving from the last incision to the first hike,” Wall said.