Benchmark deposit rate stands at 2%, its lowest since November 2022, while bank warns environment remains 'exceptionally' uncertain, especially due to trade disputes
The European Central Bank (ECB) on Thursday left its three key interest rates steady, meeting market estimates.
The key deposit rate now stands at 2%, its lowest level since November 2022.
The interest rates on the main refinancing operations and the marginal lending facility are at 2.15% and 2.40%, respectively.
This marked the end of an eight rate cut-run, which started when ECB initiated its easing cycle in June 2024.
The bank said the inflation is currently at around the Governing Council’s 2% medium-term target.
"The incoming information is broadly in line with the Governing Council’s previous assessment of the inflation outlook," the ECB said in a statement.
The bank stressed that domestic price pressures have continued to ease, with wages growing more slowly, mostly reflecting the Governing Council’s past interest rate cuts, the economy has so far proven resilient overall in a challenging global environment.
"At the same time, the environment remains exceptionally uncertain, especially because of trade disputes," it warned.
The ECB stressed that it is determined to ensure that inflation stabilizes at its 2% target in the medium term
"It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission," the EU monetary institution added.
The rate cut followed the confirmation of the eurozone's annual inflation rate at 2% in June, matching the ECB's medium-term target.
It also came after renewed trade tensions and negotiations between the US and the EU.
Earlier this month, US President Donald Trump announced a 30% blanket tariff on all imports from the EU starting on Aug. 1.
He said Wednesday that that the US would allow the EU to pay lower tariffs if the bloc agrees to open its market to American companies.
Meanwhile, the Financial Times reported Wednesday that the EU and US are heading towards a trade deal that would impose 15% tariffs on European goods, citing three sources.
The sources said the bloc could accept reciprocal levies to avoid Trump's planned hike to 30% starting Aug. 1.
Both sides could lift tariffs on certain goods, such as aircraft, spirits, and medical devices, they added.
