ECB Holds Rates Steady, Just as Fed Is Poised to Cut

Core Points - The European Central Bank (ECB) is maintaining its key deposit rate at 2% as it awaits more clarity on the impact of U.S. tariffs on growth and inflation [2][4] - The ECB has reduced rates eight times since June 2024, contrasting with the Federal Reserve's reluctance to cut rates, which has drawn criticism from President Trump [2][3] - Eurozone growth was only 0.1% in the second quarter, affected by U.S. tariffs of 15% on most goods from the bloc, although the labor market remains strong [5][6] Economic Forecasts - The ECB has raised its growth forecast for 2023 to 1.2% but lowered its forecast for 2026 to 1% [6] - Inflation forecasts have been slightly adjusted, with the ECB predicting inflation at 2.1% for this year, just above its 2% target, and a decrease to 1.7% next year [7] Inflation Outlook - The ECB is uncertain about how U.S. tariffs will influence inflation, with scenarios indicating that trade levies could either increase or decrease price pressures [8]