ECB Holds Steady Amid Trade Turbulence

The European Central Bank (ECB) has kept interest rates unchanged at 2%, as it monitors the potential impact of US tariffs on the economy. The decision comes amid ongoing trade negotiations and uncertain global conditions, with analysts predicting a possible rate cut in September if tariffs severely impact the economy.

The European Central Bank (ECB) has decided to keep interest rates unchanged at 2%, awaiting the ramifications of US President Donald Trump's tariffs on the economy. This decision was announced at the bank's towering headquarters in Frankfurt.

ECB President Christine Lagarde emphasized the economy's resilience amidst a challenging global landscape, notwithstanding the uncertain environment largely due to trade disputes. The ECB's governing council's cautious approach is influenced by ongoing trade negotiations between the EU and the Trump administration, with tariffs highly impacting economic projections.

If higher tariffs are imposed, European goods could become more expensive for US consumers, risking European firms' export earnings and potentially leading to another rate cut in September. The eurozone experienced strong growth in the first quarter, buoyed by shipments preempting tariffs, as ECB policies continue to navigate inflation and economic stability.

(With inputs from agencies.)