The European Central Bank (ECB) held its key interest rate steady at 2% for the fifth consecutive meeting, citing the current inflation and economic conditions as reasons for not adjusting rates yet. ECB President Christine Lagarde emphasized a cautious, data-driven approach to future rate decisions. Although inflation in the eurozone has softened to 1.7%, there are concerns about the strengthening euro, which could exert downward pressure on inflation and complicate the economic outlook.
Despite potential disinflationary effects from a stronger euro—making imports cheaper and possibly harming corporate profits—the ECB is monitoring these currency fluctuations closely. Economists express that the current situation, marked by uncertainty, shouldn’t be seen as a ‘non-event’. Some predict the ECB will maintain rates until 2026, with potential hikes only anticipated around mid-2027, depending on domestic inflation trends and broader economic indicators. Overall, the ECB is in a wait-and-see mode, balancing the risks of inflation and economic growth in a volatile global environment.
Source link
