Core Viewpoint - The European Central Bank (ECB) is expected to maintain interest rates at 2% during its upcoming meeting, marking the first time in a year that rates will remain unchanged as the bank awaits clarity on the impact of U.S. tariffs on inflation [1][4] Interest Rate Decisions - The ECB plans to significantly lower borrowing costs by 200 basis points between June 2024 and June 2025, aiming to keep deposit rates within a range that neither suppresses nor stimulates the economy [4] - ECB officials are divided on future actions, with some advocating for further easing due to concerns that inflation may remain below the 2% target, while others warn that increased public spending could lead to higher prices in the future [4][7] Economic Outlook - The uncertainty surrounding U.S. tariffs, particularly President Trump's threat to impose a 30% tariff on the EU starting August 1, has increased risks of a worse-than-expected economic outcome [7] - The ECB's most severe trade scenario predicts a 20% tariff on all European goods, which could further depress inflation [7] Euro Strength - The euro has appreciated by 13% against the dollar this year, raising concerns among policymakers as it makes exports more expensive and lowers import costs [8] - ECB officials are cautious about the euro's strength, with potential implications for future interest rate decisions if the euro surpasses 1.20 against the dollar [8] Communication Challenges - The ECB's policy statement and President Lagarde's remarks are unlikely to change significantly, but the wording used to describe the decision to maintain rates could influence market expectations regarding future rate cuts [9][12] Official Changes - The July meeting marks the first for Olaf Sleijpen as a council member, succeeding Klaas Knot as the Dutch central bank governor, while the departure of hawkish figures like Austrian central bank governor Robert Holzmann may influence future policy discussions [13]

Core Viewpoint - The Deputy Governor of the Bank of Japan, Shinichi Uchida, indicated that interest rates may be raised if the economic outlook is realized, highlighting the high level of uncertainty in both domestic and international economies [1] Group 1 - The current economic situation is at a critical juncture, necessitating preparedness for both upward and downward risks [1] - Policy adjustments are required to maximize the balance of risks in the economic landscape [1]

Core Viewpoint - The Bank of Japan is expected to provide an outlook on the impact of recent tariffs on the Japanese economy this month, but the tone will be less pessimistic compared to three months ago [1] Group 1 - The Bank of Japan is likely to address the economic effects of recent tariffs [1] - The outlook will reflect a more optimistic perspective than previously expressed [1]

Core Viewpoint - The Bank of Japan's policy board member Takeda Soichi stated that it is difficult to determine the duration of the interest rate pause, indicating uncertainty in monetary policy direction [1] Economic Outlook - The economic outlook may be influenced by changes in tariff policies, suggesting that external trade factors could impact Japan's economic performance [1]