Published by Global Banking & Finance Review®
Posted on August 23, 2025
3 min readLast updated: January 22, 2026
Add as preferred source on GoogleECB may keep rates steady in September, but rate cut talks could resume if economic conditions worsen. Future discussions are likely in October and December.
JACKSON HOLE, Wyoming (Reuters) -The European Central Bank is likely to keep interest rates on hold next month but discussions about further cuts may well resume in the autumn if the economy weakens, five sources told Reuters.
ECB President Christine Lagarde said in July the euro zone's central bank was "in a good place" as it left its key rate at 2%, bringing a year-long cutting cycle to an end and leading investors to bet on a prolonged pause.
Data since then showed the euro zone economy was proving more resilient than expected while inflation hovered at the ECB's 2% target, central bank officials in Europe and at the Federal Reserve's Jackson Hole Symposium said.
Meanwhile tariffs imposed by U.S. President Donald Trump's administration on European Union imports, at 15% for most goods, were close to the ECB's own expectations and averted the most pessimistic scenarios, the central bank sources said.
This meant that a rate cut on September 11 was now largely seen as unnecessary, barring a sudden worsening in incoming data such as a flash inflation reading for August and economic activity surveys, according to the sources. They all declined to be named because policy deliberations are confidential.
Equally, the sources noted that the ECB's latest economic projections, which see inflation dipping below its 2% target next year before edging back to it, incorporate a further rate reduction.
This meant that discussions about further monetary policy easing were likely to resume at the ECB's October 30 and December 18 meetings, particularly if U.S. tariffs started taking a toll on euro zone exports to its top trading partner or if hopes for an end to Russia's war in Ukraine were dashed, the sources added.
An ECB spokesperson declined to comment.
Money markets were pricing in some chance of a further ECB rate cut, but not before the spring of next year.
Investors have grown more optimistic about the euro zone's economic outlook after surveys showed business activity picked up pace over the summer, with new orders increasing in August for the first time since May 2024.
Some policymakers cautioned this may be due to U.S. importers bringing forward orders from the euro zone to beat tariffs, which would imply a reversal in the coming months.
(Additional reporting by Frank Siebelt in Frankfurt; Editing by Emelia Sithole-Matarise)
The European Central Bank (ECB) is the central bank for the eurozone, responsible for monetary policy and maintaining price stability within the euro area.
Interest rates are the cost of borrowing money, expressed as a percentage of the total loan amount, influencing economic activity and inflation.
Monetary policy involves the management of money supply and interest rates by a central bank to control inflation and stabilize the currency.
U.S. tariffs are taxes imposed on imported goods, aimed at protecting domestic industries by making foreign products more expensive.
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