The European Central Bank (ECB) has maintained its key interest rates, with the deposit rate remaining at 3.75%, as it continues to navigate a complex economic landscape. ECB President Christine Lagarde emphasized a data-dependent approach for future decisions, stating that the September meeting is ‘totally open’ to all possibilities. This stance marks a slight shift from June’s ‘strong probability’ of monetary policy relaxation.Notably, some of the ECB’s most conservative members, known as ‘hawks’, are now open to considering a rate cut in September if upcoming economic data supports such a move. The decision will largely depend on indicators published in late August and early September, particularly focusing on wage growth, corporate profits, and productivity trends.European stock markets showed mixed reactions to the ECB’s decision. While some indices like the CAC 40 in Paris and the FTSE 100 in London made modest gains, others such as the DAX in Frankfurt closed lower. The euro weakened against the dollar, reaching its lowest level in four months.The ECB’s cautious approach comes amid persistent inflationary pressures in the eurozone, particularly in the services sector where wage components are significant. Lagarde noted that while the bank is on a path to disinflation, internal price pressures remain high. The ECB is also factoring in potential global economic uncertainties, including the impact of US policies and possible trade tariffs.Market expectations for a rate cut in September remain high, with some analysts assigning an 80% probability to monetary policy easing by then. However, the ECB will closely monitor upcoming economic data, especially wage growth indicators expected in late August, before making any decisions. As the situation evolves, both investors and policymakers will be keenly watching for signs of economic shifts that could influence the ECB’s next moves.
Key points
- ECB maintains key interest rates, with deposit rate at 3.
- Some ECB hawks now open to potential September rate cut, depending on economic data.
- European stock markets show mixed reactions to ECB decision.
- ECB emphasizes data-dependent approach, closely monitoring inflation and wage growth.
75%.
Contradictions👾While some sources suggest a high probability of a rate cut in September, others emphasize that the decision is still open and dependent on upcoming data.
