Christine Lagarde, president of the European Central Bank (ECB), addresses the annual European Systemic Risk Board conference in Frankfurt, Germany, on Wednesday, Sept. 3, 2025.
Alex Kraus/Bloomberg via Getty Images
The European Central Bank held interest rates steady on Thursday as economic uncertainty persists in the wake of U.S. Donald Trump’s aggressive tariff agenda.
Ahead of the decision, markets had been pricing in an around 99% chance of the ECB’s key deposit facility rate being left at 2% for the second consecutive time. The central bank last cut rates in June, bringing rates further down from last year’s record high of 4%.
The ECB is grappling with global economic uncertainty, despite inflation in the euro zone hovering around the central bank’s 2% target in recent months, and the EU striking a trade agreement with the U.S.
The transatlantic partners agreed to 15% blanket tariffs on EU exports to the U.S. in July, with further details about the framework emerging last month. It addressed some questions for key European sectors like pharmaceuticals.
However, questions remain as some issues — such as provisions for the wine and spirits sector — were left open. Concerns over further tariffs have also grown following Trump’s threat of retaliations against the EU after it hit Alphabet‘s Google with a $3.45 billion antitrust fine.
Fears about the impact tariffs could have on economic growth remain. Growth in the euro zone has remained sluggish even as rates have come down, with the latest figures showing just 0.1% growth in the second quarter after a 0.6% expansion in the previous period.
While the interest rate decision itself was widely anticipated, Deutsche Bank economists last week noted that “the focus will be on the signals for the path that lies ahead for monetary policy.”
Markets on Thursday are therefore expected to focus on ECB President Christine Lagarde’s press conference and the latest projections for inflation and economic growth. The central bank last updated its economic forecasts in June.
This is a breaking news story, please check back for updates.
