FRANKFURT: The European Central Bank held interest rates steady on Thursday as policymakers waited to see whether the eurozone would be hit by higher US tariffs threatened by President Donald Trump.

The pause brought to an end a streak of consecutive cuts stretching back to September 2024 that has seen the ECB slash its benchmark deposit rate to 2 per cent.

The swift reduction in borrowing costs for businesses and households in the 20 members of the single-currency bloc has come as inflation has fallen back from the double-digit peaks seen at the end of 2022.

Consumer prices in the eurozone rose at a pace of 2pc in June, exactly in line with the ECB’s target for inflation.

The moderate inflation read and encouraging signs of growth meant the ECB was in a “good place”, ECB President Christine Lagarde said at a press conference following the rates announcement.

The outlook however, remained “exceptionally uncertain, especially because of trade disputes”, it warned.

A further escalation in trade tensions could deliver a fresh blow to the eurozone economy, with Trump having set a deadline of August 1 to impose a basic tariff rate of 30pc on the European Union.

Published in Dawn, July 25th, 2025