The European Central Bank (ECB) has decided to keep its key interest rate at 2%, citing stable inflation and reduced international trade tensions. The move reflects a cautious stance as the eurozone economy shows signs of balance.
At Thursday’s policy meeting, the ECB pointed to the recent trade agreement between the U.S. and EU as a key factor in maintaining the rate. The deal, reached in late July, helped ease uncertainty for many businesses and contributed to a more predictable economic environment.
While the ECB sees no immediate need to adjust rates, economists warn that renewed global tensions—particularly around U.S. import tariffs could push inflation above target levels again. If that happens, a rate cut may be back on the table.
The ECB also held rates steady in July, following eight previous cuts aimed at stimulating a sluggish economy. Lower interest rates reduce borrowing costs for banks, which can lead to cheaper loans and mortgages for consumers, but also lower returns on savings.
