Snapshot 5:Thu, Jul 24, 2025 8:21:47 PM GMT last edited by SofiaLanfri

ECB Holds Rates Steady at 2%

ECB Holds Rates Steady at 2% Amid US Trade Uncertainty

Published JUL 24 2025

story

Above: Christine Lagarde in Frankfurt, Germany, on Thursday, July 24, 2025. Image credit: Alex Kraus/Bloomberg/Getty Images

The Spin

The ECB's pause makes perfect sense given current conditions. Inflation is right at target, the economy shows resilience with solid growth, and unemployment remains historically low. ImportantIt's also important to note also is that Europe's inflation is mostly untethered from tariff concerns, meaning that the bank must be conservative with rates cuts and not abandon sensible planning.

European Conservative

This pause could be a mistake if trade tensions escalate. Higher tariffs will slam European exporters and drag down growth, making another rate cut inevitable by September. The ECB should have acted preemptively rather than waiting for damage to materialize, especially if the notoriously capricious Trump opts for a much higher tariff rate, which would cause serious economic damage.

Wsj

Metaculus Prediction

There is a 50% chance the annual real GDP growth rate in the eurozone will be at least 1.12% in 2025, according to the Metaculus prediction community.