ECB leaves interest rates at 2% with Trump tariff threats leading uncertainty

The ECB kept its key deposit rate unchanged at 2% on Thursday, choosing to stand still for the second straight ￰0￱ decision was widely expected, with markets pricing in a 99% chance of no ￰1￱ the reason it matters is what’s now surrounding the decision, and it’s not ￰2￱ euro zone is stuck in a slow-growth cycle, and Donald Trump’s trade war rerun is threatening to make things ￰3￱ last time the ECB adjusted rates was in June, when it finally eased off from last year’s all-time high of 4%. Now, with inflation sitting roughly at target, “around the 2% medium-term target,” as the bank said, there’s no immediate reason to ￰4￱ there’s also no clarity on what comes next.

“The Governing Council’s assessment of the inflation outlook is broadly unchanged,” the statement ￰5￱ forward ￰6￱ ￰7￱ data-watching and more waiting. Trump’s threats shake economic outlook The bigger problem is the chaos coming from outside ￰8￱ ECB made its decision while global uncertainty keeps building. Yes, inflation seems ￰9￱ the rest of the economy? Not so ￰10￱ euro zone barely grew in Q2, just 0.1%, down from 0.6% the quarter ￰11￱ while the ECB pretends it’s in control, growth is still being pulled down by forces far beyond its policy ￰12￱ and the ￰13￱ a trade agreement in July, which slapped a 15% blanket tariff on EU exports heading to the ￰14￱ mostly helped sectors like pharma, but others (especially wine and spirits) were left ￰15￱ came ￰16￱ threatened retaliation against the EU after Brussels hit Google with a $3.45 billion ￰17￱ markets are bracing for another round of tit-for-tat ￰18￱ every new headline makes the ECB’s job ￰19￱ while the bank talks about inflation being stable, there’s more going on underneath.

They’re not saying it outright, but the mood is tense. There’s no commitment to future hikes or ￰20￱ approach is now officially “meeting-by-meeting,” which is central bank code for we have no clue what’s ￰21￱ a strong euro and rising global competition, and suddenly this rate pause looks more like hesitation than ￰22￱ staff raise growth forecast, tweak inflation path What people really focused on Thursday wasn’t the rate decision; it was the projections and Lagarde’s press ￰23￱ here’s what came out of that: inflation is expected to average 2.1% in 2025, then fall to 1.7% in 2026 and rise slightly to 1.9% in 2027. That’s not far off from June’s forecast, which had 2% for 2025, 1.6% for 2026, and 2% for ￰24￱ exactly a major ￰25￱ inflation, which ignores food and energy, is seen holding steady at 2.4% this year, same as the previous ￰26￱ the growth side, the update was slightly more ￰27￱ ECB now sees 1.2% growth in 2025, up from the 0.9% it expected in ￰28￱ 2026 outlook was pulled down to 1%.

And for this year, Lagarde gave the clearest snapshot so far. “The economy grew by 0.7% in cumulative terms over the first half of the year on account of the resilience in domestic demand,” she ￰29￱ she wasn’t exactly cheerful about the months ahead. “Higher tariffs, a stronger euro and increased global competition are expected to hold growth back for the rest of the year,” Christine warned. Still, she added, “the effect of these headwinds on growth should fade next year.” That’s the line they’re sticking ￰30￱ it holds or not is anyone’s ￰31￱ seen where it ￰32￱ in Cryptopolitan Research and reach crypto’s sharpest investors and builders.