MNI ECB WATCH: ECB To Hold After A Year, Looking For Hints

The European Central Bank is set to hold interest rates for the first time since July 2024 this Thursday, after cutting for seven consecutive meetings to 2%.

Policymakers consider that the inflation path from the last round of projections in June is still valid, and with limited data since the last meeting, debate over an additional cut has been pushed back to September or even later in the year. (MNI SOURCES: ECB Projections Confirmed So Far, Sept Cut Likely)

Uncertainty around U.S. trade policy towards Europe remains elevated after the new Aug 1 deadline set by President Donald Trump to avoid 30% tariffs, and, while the ECB does not target the exchange rate, Vice President Luis de Guindos attracted attention at the Sintra forum by signalling USD1.20 could be a problematic level, though some of his colleagues later expressed surprise at his comments in private. (MNI INTERVIEW: ECB's Wunsch Sees Downside Growth, Price Risks)

2% COULD BE TERMINAL

While some policymakers now see a higher chance that the ECB will keep rates at 2% for the rest of the year than only a month ago, markets still price at least one more cut for 2025, and investors will parse the policy statement and President Christine Lagarde comments for hints as to whether this is more likely to come in September or December (MNI INTERVIEW: ECB Should Stay At 2% If Outlook Holds- Demarco)