ECB Keeps Rates Unchanged, but Trump’s Trade Offensive Fuels Eurozone Anxiety

The European Central Bank (ECB) has once again decided to keep its key deposit rate at 2%, marking the second consecutive meeting without changes. While this move was widely expected by the markets, the decision comes amid a tense global backdrop, raising concerns that the eurozone is heading into a period of greater uncertainty.

A Pause Without Clear Direction The ECB justified its stance by pointing out that inflation remains close to its medium-term target of 2%. After cutting rates from last year’s 4% peak in June, the central bank is now adopting a wait-and-see approach. No forward guidance on whether rates will rise or fall – only careful monitoring of data. Economic growth across the eurozone remains fragile. GDP expanded by just 0.1% in the second quarter compared to 0.6% in Q1, showing that recovery is constrained not only by domestic factors but also by rising geopolitical tensions.

Trump’s Tariff Threats Complicate the Picture The biggest pressure point comes from the United States. President Donald Trump, now back in the White House, has shifted course on both Russian oil and trade policy with the EU. After Brussels fined Google $3.45 billion, Trump threatened retaliatory tariffs. The EU had earlier introduced a blanket 15% tariff on exports to the U.S., which benefited sectors like pharmaceuticals but left others – especially wine and spirits – exposed. Potential retaliatory measures from Washington could hit the eurozone even harder. Analysts warn that these tensions, combined with a slowdown in foreign investment flows, reflect how the global environment is becoming increasingly difficult for Europe.

Inflation and Growth Forecasts Updated ECB projections show inflation averaging 2.1% in 2025, falling to 1% in 2026, and rebounding slightly to 1.9% in 2027. Core inflation is expected to hold steady at 2.4% this year. Growth expectations, however, have been revised upward. For 2025, the ECB now forecasts 1.2% growth (up from 0.9% in June). So far this year, the eurozone economy has grown 0.7% cumulatively thanks to resilient domestic demand, but Christine Lagarde warned that higher tariffs, a stronger euro, and global competition will weigh on growth for the rest of the year.

What Does This Mean for the Eurozone? The ECB’s current stance is being described as “meeting by meeting,” essentially code for: no clear long-term strategy, only reactive decision-making. Combined with Trump’s escalating trade tensions and sluggish eurozone growth, maintaining stability could prove much harder than inflation figures alone suggest. 📊 Whether this cautious approach shields the eurozone or exposes its weaknesses will become clear in the months ahead.

#ECB , #Eu , #TRUMP , #GlobalMarkets , #Inflation

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