President Christine Lagarde indicated that the ECB is approaching the end of its current monetary easing cycle, with a cautious stance influenced by recent economic data and trade negotiations.

Inflation in the Eurozone has fallen sharply from double digits in late 2022 to 2% in June 2025, aligning with the ECB’s target and reducing the urgency for further rate cuts.

Eurozone economic activity has shown resilience, with a 0.6% growth rate in the first quarter of 2025, partly driven by pre-emptive shipments ahead of potential tariffs.

Despite this growth, concerns about inflation and the impact of a strengthening euro persist, with the euro appreciating over 12-15% against the dollar this year, raising worries about export competitiveness.

The euro's recent surge to around $1.17, and potentially reaching $1.20 next year, complicates the ECB's policy, especially as the euro's strength could hinder growth and inflation targets.

The ECB remains cautious due to the risks posed by U.S.-EU trade tensions, with ongoing negotiations and a looming August 1 deadline influencing its decision-making.

Analysts suggest that one more rate cut in September could occur if trade negotiations and economic data warrant, but many believe the cycle of easing may be nearing its end.

Some officials, including ECB Vice President Luis de Guindos, warn that a euro above $1.20 could further complicate the economic outlook.

In the United States, the housing market remains stagnant, with high mortgage rates and unaffordable prices limiting activity, adding to global economic uncertainties.

Recent positive indicators, such as increased industrial production, have provided some relief for the Eurozone economy, easing immediate pressure on the ECB.

While the ECB is holding rates steady, the possibility of future easing remains, especially if economic conditions deteriorate due to trade tensions or a stronger euro.

Overall, the ECB’s cautious approach reflects a balancing act between supporting growth, managing inflation, and navigating geopolitical risks, with key economic data and trade developments likely to influence upcoming decisions.

The European Central Bank (ECB) is expected to keep interest rates steady at 2% during its July 25, 2025, meeting, after eight consecutive rate cuts, amid ongoing economic uncertainty and trade tensions.