ECB to hold rates steady amid trade tensions — Erste Group Forecast

Erste Group analysts anticipate the European Central Bank (ECB) will maintain current interest rates at its July 24 meeting, following June's 25 basis-point cut that lowered the deposit rate to 2%. While easing was justified by eurozone inflation and weak growth, the ECB indicated a pause due to escalating US-EU trade tensions.

The potential 30% tariffs threatened by American President Donald Trump on eurozone imports have compelled the ECB to reassess its outlook. However, Reuters reports that central bank officials still expect to pause rate cuts in July.

Erste Group's team, led by Gerald Walek, warns that the ECB's readiness for further monetary easing would increase if tariffs take effect and trigger EU countermeasures. Current US-EU negotiations aim to prevent such escalation. For now, the eurozone's central bank sees no immediate need for additional rate cuts.