Overview

• The ECB held its deposit rate at 2%, marking a pause after eight reductions since June 2024
• Eurozone inflation has returned to the bank’s 2% target, reducing pressure for immediate policy action
• Brussels and Washington are edging toward a deal for a 15% tariff ahead of a U.S. August 1 deadline for trade talks
• The Governing Council adopted a meeting-by-meeting, data-dependent approach as hawks warned of supply-driven price shocks and doves cautioned on slowing growth
• Markets still expect one more rate cut by year-end as the euro’s strength and potential trade disruptions cloud the outlook