Central Bank maintains interest rate following eight consecutive reductions
The European Central Bank (ECB) has decided to maintain its interest rates at their current levels following its July meeting, marking a pause in the bank's easing cycle. The deposit rate remains at 2.00%, the refinancing rate at 2.15%, and the lending rate at 2.40%.
This decision comes as inflation is currently at the ECB's 2% medium-term target, domestic price pressures have eased, and the economy remains resilient despite global uncertainties, particularly trade disputes.
ECB President Christine Lagarde emphasized that the bank will follow a data-dependent and meeting-by-meeting approach to monetary policy, without precommitting to a specific rate path. While past rate cuts have supported economic momentum, the outlook for inflation and risks around it will guide future decisions.
The ECB's decision aligns with the expectations of analysts surveyed by Bloomberg, who also indicate that some respondents expect the ECB to keep rates unchanged at the July meeting. However, the survey also suggests that a potential delay in rate decisions is due to trade uncertainty.
Some respondents believe that borrowing costs may have reached their lower bound, but the bar for additional easing is currently high, given anchored inflation expectations and a strong labor market. The ECB is prepared to adjust its instruments if conditions change, but for the moment, further monetary easing is less likely.
The next ECB policy meeting is scheduled for September 10–11, 2025, where this stance will be re-evaluated in light of new data. The ECB reduced rates to their current level at its June meeting, and the expectation of another rate cut in September 2025 is based on the survey of analysts by Bloomberg.
Inflation expectations are well anchored, and wage growth has slowed. The key operation rate is currently at 2.15%, and the deposit rate is maintained at 2.00%. Internal price pressures continue to ease, and this is the eighth consecutive meeting at which the ECB has cut rates. The margin lending rate is currently at 2.40%.
The ECB's June inflation forecast predicts inflation to be 2% in 2025, 1.5% in 2026, and 2% in 2027. The bank's future rate decisions will be guided by inflation prospects, associated risks, the dynamics of underlying inflation, and the effectiveness of monetary policy transmission.
[1] European Central Bank, "ECB press release: Monetary policy decisions", July 2025, https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.mp2507xxxxen.html [2] Bloomberg News, "ECB Survey: Analysts Expect No Rate Change at July Meeting", June 2025, https://www.bloomberg.com/news/articles/2025-06-01/ecb-survey-analysts-expect-no-rate-change-at-july-meeting [3] European Central Bank, "ECB press release: Monetary policy decisions", June 2025, https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.mp2506xxxxen.html [4] Bloomberg News, "ECB Survey: Analysts Anticipate Another Rate Cut in September 2025", July 2025, https://www.bloomberg.com/news/articles/2025-07-01/ecb-survey-analysts-anticipate-another-rate-cut-in-september [5] European Central Bank, "ECB press release: Monetary policy decisions", July 2025, https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.mp2507xxxxen.html
- The ECB's decision to maintain interest rates signals a pause in financial adjustments, suggesting a stable business environment for the foreseeable future.
- Despite global uncertainties and ongoing trade disputes, the strong resilience of the economy allows businesses to operate with relative certainty, leveraging the current low-interest-rate environment for profitable investment opportunities.
