Finance
ECB more likely to wait until year-end to cut rates, Simkus says
Published by Global Banking & Finance Review®
Posted on June 30, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 30, 2025
2 min readLast updated: January 23, 2026
The ECB is likely to postpone interest rate cuts until year-end due to unresolved trade talks and stable inflation projections, says Simkus.
SINTRA, Portugal (Reuters) -The European Central Bank may not have all the information it needs, including on the trade outlook, by September, making any interest rate cut more likely to come later in the year, ECB policymaker Gediminas Šimkus told Reuters.
After cutting interest rates seven times in a row as inflation fell, the ECB has hinted at a pause at its next meeting so it can wait for the fog surrounding trade negotiations between the euro zone and the United States to clear.
With these talks still unresolved, Simkus, the Lithuanian central bank governor, said a pause in July was "very likely" and signalled the ECB might be on hold for longer.
"I don't know if we'll have all the information we need by September, but I remain open to every possibility," Simkus said in an interview on the sidelines of the ECB's Forum on Central Banking in Sintra, Portugal.
"I believe a move, if any, is more likely towards the end of the year."
Following the ECB line, Simkus said the central bank would decide "meeting by meeting" and avoid any precommitment given the "unpredictable environment".
"Uncertainty hasn’t receded but grown,” he said.
The ECB's June projection showed inflation at the ECB's 2.0% target this year, before dipping to 1.6% the next and returning to 2.0% in 2027.
Simkus said that scenario still held.
"Nothing has fundamentally changed since June," Simkus said. "The September projections may be fairly similar to June’s, maybe except the euro is even stronger.”
(Reporting By Francesco Canepa; Editing by Alex Richardson)
The ECB may not cut interest rates until later in the year, as indicated by Simkus, who believes a move is more likely towards the end of the year.
The ECB is waiting for more information on trade negotiations and the economic outlook, which remains uncertain and unpredictable.
Simkus noted that the ECB's June projection showed inflation at the 2.0% target this year, dipping to 1.6% next year, and returning to 2.0% by 2027.
The ECB has cut interest rates seven times in a row as inflation has fallen.
Simkus emphasized that the ECB would decide 'meeting by meeting' and avoid any precommitment due to the unpredictable environment.
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