The ECB is Expected to Keep Rates Unchanged at Its Third Meeting

Recent statements from European Central Bank (ECB) officials indicate that the current direction of monetary policy is consistent with the medium-term inflation target of 2%. They reaffirmed that decisions will be made "meeting by meeting," reflecting a low inclination towards short-term easing despite ongoing geopolitical tensions, uncertainty related to trade policy, and potential budgetary impacts from increased defense spending. Between June 2024 and June 2025, the ECB reduced borrowing costs by 200 basis points, pausing in July after inflation returned to its target. Markets are now anticipating that rates will remain steady in the short term, with a potential first reduction of 25 basis points expected in July 2026.