The European Central Bank (ECB) maintained its interest rates unchanged Thursday, after a long cycle of declines. The Frankfurt Institute wants to take the time to assess imminent decisions in the commercial showdown between Washington and Europeans.
After seven consecutive drops and eight in total since last June, the ECB has maintained its deposit rate, which refers to 2% against a 4% peak reached in full inflationary wave. This monetary status quo puts an end to a series of rate drops, started a year ago when the ECB had decided to gradually decrease the cost of the credit to support the decline in inflation.
The pace of the increase in consumer prices has stabilized around the 2% target set by the Central Bank, after reaching record levels in the wake of the Pandemic of Covid-19 and the large-scale invasion of Ukraine by Russia.
“Extreme” uncertainty
The moderation of inflation and the encouraging signs on the growth side place the ECB place in “good position to cope with the turbulence and the risks that will present themselves in the coming months,” assured Christine Lagarde to the press after the rate announcement. But she did not hide that she would like to see “quickly” extreme “uncertainty” for the global economy that the all -round commercial offensive by Donald Trump started.
The Guardians of the Euro “are pending, in the hope of greater clarity on economic prospects and the implications of commercial negotiations between the EU and the United States,” notes Stefan Gerlach, chief economist at EFG Bank in Zurich.
Customs duties scrutinized
After negotiations in twists and turns, for several weeks, a trade agreement between the EU and the United States seemed to be emerging on Thursday. According to several European sources, the agreement provides for customs surcharge of 15% on European exports for the United States, with exemptions notably on aeronautics, spirits or certain drugs.
>> More details in our article: Towards 15% customs duties between the EU and the United States, according to diplomatic sources
Donald Trump had taken the European Union short on July 12 by decreeing customs duties of 30% on all imports from the EU from August 1. The strengthening of commercial barriers is likely to bring a new blow to the economy of the euro zone and to encourage the ECB to consider another rate drop after the summer. But they could also grow upward prices again.
Christine Lagarde stressed that it is “very difficult to assess for the moment” the impact of these customs movements on inflation, making “impossible” to predict the monetary course of the ECB.
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