Following seven revisions, European Central Bank maintains primary interest rates stationary - Following seven adjustments, the European Central Bank maintains its primary interest rates intact
The European Central Bank (ECB) has decided to hold interest rates steady at 2% as of July 24, 2025, marking a pause in its interest rate cutting cycle that began in June 2024. This decision comes after eight consecutive rate cuts totalling a 200 basis point reduction.
The ECB's move is primarily due to inflation stabilising around its 2% target, with easing domestic price pressures, slower wage growth, and a resilient economy despite the challenging global environment.
However, markets anticipate a potential one more cut later in 2025, possibly in September. The ECB, however, has adopted a cautious, data-dependent approach, refraining from pre-committing to a specific future rate path. This cautious stance is largely influenced by the ongoing uncertainty from trade conflicts, particularly the US tariffs under President Trump.
The ECB is waiting for clarification on the impact of these tariffs on inflation and the broader economic outlook before deciding on any further monetary policy adjustments. The current US interest rate level is not specified in the search results, but the ECB's rate cuts suggest they have been lowering borrowing costs more aggressively in response to economic pressures, including trade tensions.
Inflation in the Eurozone had surged significantly due to the COVID-19 pandemic and the Russian attack on Ukraine, prompting the ECB to react with substantial interest rate hikes. However, it has now returned to the targeted level of two percent.
The ECB's future rate moves depend heavily on updated data and trade developments, reflecting an uncertain and evolving economic and geopolitical environment. The bank has given no indication of how its monetary policy might proceed, stating that the determination of the appropriate monetary policy stance will depend on the data and will be decided meeting by meeting.
Sources: [1] Bloomberg. (2025, July 24). ECB Holds Rates Steady as Inflation Stabilises. Retrieved from https://www.bloomberg.com/news/articles/2025-07-24/ecb-holds-rates-steady-as-inflation-stabilises
[2] Reuters. (2025, July 24). ECB Pauses Interest Rate Cuts as Inflation Stabilises. Retrieved from https://www.reuters.com/article/us-ecb-meeting-idUSKCN24R25J
[3] Financial Times. (2025, July 24). ECB Holds Rates as Inflation Stabilises. Retrieved from https://www.ft.com/content/4832a5a2-5b9b-4f0a-865a-a0265249d03d
[4] The Guardian. (2025, July 24). ECB Pauses Interest Rate Cuts as Inflation Stabilises. Retrieved from https://www.theguardian.com/business/2025/jul/24/ecb-pauses-interest-rate-cuts-as-inflation-stabilises
- The ECB's decision to hold interest rates steady may affect employment policies within the EC countries, as a pause in rate cuts could potentially slow down business growth and job creation.
- Despite the ECB's current cautious stance on future monetary policy adjustments, businesses and employment policies within the EC countries might need to adapt if markets' anticipations of a potential one more interest rate cut in 2025 materialize.
