logo
ECB expected to hold rates as Trump tariff uncertainty lingers

ECB expected to hold rates as Trump tariff uncertainty lingers

Khaleej Times21-07-2025
The European Central Bank is set to hold interest rates for the first time in almost a year when policymakers meet this week, despite concerns over the potential impact of higher US tariffs on the eurozone economy.
The 26 members of the ECB's governing council will meet just over a week before an August 1 deadline set by US President Donald Trump for the imposition of his government's punitive tariffs.
Trump has threatened to triple a basic tariff on imports from the EU to 30 percent if Brussels does not cut a deal by the end of the month, casting uncertainty over the future of transatlantic trade.
But the ECB was expected to hold tight on rates instead of preempting the outcome of negotiations, pausing a series of cuts that goes back to September.
The central bank has reduced its benchmark rate a total of eight times since June last year and at each of its last seven meetings, bringing it down to two per cent.
The rapid reduction in rates has come as eurozone inflation has fallen back towards the ECB's two-percent target from the double-digit highs seen in 2022.
In June, eurozone inflation sat exactly on the ECB's target and was forecast by officials at the central bank to even out at two percent for the year.
'More clarity'
The ECB would "almost certainly leave interest rates unchanged" at the conclusion of its monetary policy meeting on Thursday, analysts from Italian bank UniCredit said in a note.
"The central bank will now want to have more clarity on the trade outlook before it considers adjusting its policy further," they said.
Despite the murky outlook, the ECB was in a "good place" to deal with what comes next, executive board member Isabel Schnabel told financial news service Econostream Media this month.
And with the euro area economy showing some signs of life despite Trump's threats on tariffs, "the bar for another rate cut is very high", she said.
Euro area factory output has grown four months in a row and the bloc's manufacturing PMI -- a survey-based measure of manufacturer's overall health -- rose in June to its highest level since August 2022.
The improving picture painted by recent indicators could, however, be shattered were Trump to follow through with additional tariffs on top of steep existing levies on auto manufacturers, steel and aluminium.
Euro strength
The sabre-rattling from the Oval Office over trade -- and Trump's repeated attacks on the US Federal Reserve's independence -- have otherwise had the impact of weakening the dollar against the euro.
Were the euro to rise much further it would make matters "much more complicated", ECB Vice President Luis de Guindos told Bloomberg TV this month.
A stronger single currency brought with it the risk of undershooting the ECB's inflation target by making imports cheaper and cooling the economy, while making European exports more expensive.
Already, the ECB's forecasts published last month predict inflation to fall to 1.6 percent in 2026, before recovering to two percent the following year.
A strong euro meant rate cuts later in the year were a matter of "when and by how much and not if", ING bank analyst Carsten Brzeski said.
The question would get "more attention" at forthcoming ECB gatherings, Brzeski said, but the uncertainty over US tariffs argued in favour a "wait-and-see approach".
Trump had upped the threatened level of tariffs on EU exports to the United States since the ECB's last meeting but where they would land after August 1 was uncertain.
With the EU locked in talks with Washington to avoid higher tariffs, the necessary "clarity is unlikely to emerge by next Thursday", UniCredit analysts said.
A pause was likely before another cut later in the year, perhaps already in September, the first meeting after the summer, they said.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

NTT DATA and Mistral AI to shape future of sustainable and secure private ai for enterprises
NTT DATA and Mistral AI to shape future of sustainable and secure private ai for enterprises

Zawya

time41 minutes ago

  • Zawya

NTT DATA and Mistral AI to shape future of sustainable and secure private ai for enterprises

DUBAI, UAE – NTT DATA, a global leader in digital business and technology services, and Mistral AI, a rising innovator in open-weight, high-performance generative AI (GenAI) models, today announced plans to jointly sell and deploy safe and private enterprise-grade AI solutions that are able to foster strategic autonomy for clients. The companies will combine NTT DATA's comprehensive GenAI and IT services portfolio, global delivery capabilities, industry expertise and trusted client relationships with Mistral AI's solutions and advanced generative AI models, which are recognized for their efficiency, performance and enterprise empowerment. Initial focus areas include: Sustainable and Secure AI Co-Development: The companies will develop sustainable and highly secure private AI solutions for organizations in regulated sectors such as financial services, insurance, defense and public sector. The companies will provide end-to-end solutions from infrastructure to business processes powered by AI applications for clients operating on private clouds. AI-Driven Innovation for IT Infrastructure & Customer Experience: The companies will pioneer the integration of Mistral AI technologies into NTT DATA's customer experience platforms, beginning with agentic AI call center solutions in Europe and Asia Pacific. Joint projects could include co-development of LLMs for specific languages, which will further AI innovation tailored to local markets and specialized needs. Go-To-Market Expansion: NTT DATA and Mistral AI will jointly develop and execute regional go-to-market strategies tailored to the unique dynamics of countries including France, Luxembourg, Spain, Singapore and Australia. End-to-end AI services will range from use-case development and customization to implementation, support and managed services. Dedicated sales teams will be assigned to address key client needs and priorities. To drive innovation and implementation excellence, NTT DATA will establish a Mistral AI Center of Excellence staffed with subject matter experts and dedicated resources. In addition, Mistral AI will launch a technical enablement and certification program for NTT DATA personnel. 'Collaborating with Mistral AI to bring trustworthy, impactful AI to market aligns with NTT DATA's mission to accelerate client success and positively impact society through responsible innovation,' said Abhijit Dubey, CEO and Chief AI Officer*, NTT DATA, Inc. 'By joining forces with Mistral AI, we will harness the power of high-performing AI models combined with NTT DATA's comprehensive AI capabilities, including our Smart AI AgentTM Ecosystem. In doing so, we can assure secure, scalable and sustainable deployments for enterprises across the globe.' 'By collaborating with a global leader in digital transformation like NTT DATA, we will bring our next-generation AI solutions into real-world business applications, with a strong focus on organizations that need the highest standards of data privacy in their AI journey,' said Arthur Mensch, CEO, Mistral AI. In one of the first joint projects, Dennemeyer, a leading full-service global provider for intellectual property (IP) management, has chosen Mistral AI and NTT DATA to develop an AI-driven application for advanced patent searches and analyses, bringing the technical layers to securely run AI workloads.'Dennemeyer continues to be a driving force in the digital transformation of the IP industry; a key aspect of this is strong partnerships with organizations like Mistral AI and NTT DATA, who bring a deep technical understanding of AI and its integration into business processes,' said Brochmann Laurent, Global Chief Digital Officer, Dennemeyer. In another early effort, NTT DATA Luxembourg and Mistral AI will co-develop a sovereign platform in Luxembourg for clients in the regulated financial services and insurance industries. 'This collaboration offers a landmark opportunity to accelerate the adoption of AI across the financial and insurance markets in Luxembourg and beyond,' said Olivier Posty, Head of France and Luxembourg, NTT DATA. 'Together, we're creating a full-stack platform that is ready to host critical financial applications.' * Additional role effective Sept. 1, 2025 About Mistral AI Mistral AI is a pioneer company in generative artificial intelligence, empowering the world with the tools to build and benefit from the most transformative technology of our time. The company democratizes AI through high-performance, optimized, and cutting-edge open-source models, products and solutions as well as end-to-end infrastructure with Mistral Compute. Headquartered in France and independent, Mistral AI defends a decentralized and transparent approach to technology, with a strong global presence in the United States, United Kingdom, and Singapore. About NTT DATA NTT DATA is a $30+ billion trusted global innovator of business and technology services. We serve 75% of the Fortune Global 100 and are committed to helping clients innovate, optimize and transform for long-term success. As a Global Top Employer, we have experts in more than 50 countries and a robust partner ecosystem of established and start-up companies. Our services include business and technology consulting, data and artificial intelligence, industry solutions, as well as the development, implementation and management of applications, infrastructure and connectivity. We are also one of the leading providers of digital and AI infrastructure in the world. NTT DATA is part of NTT Group, which invests over $3.6 billion each year in R&D to help organizations and society move confidently and sustainably into the digital future. Visit us at

Chinese, US officials meet for 2nd day of trade talks in Stockholm
Chinese, US officials meet for 2nd day of trade talks in Stockholm

Khaleej Times

time41 minutes ago

  • Khaleej Times

Chinese, US officials meet for 2nd day of trade talks in Stockholm

Chinese and US delegations met for their second day of trade negotiations in Stockholm, with both sides said to be aiming to extend a truce due to end in two weeks' time. AFP journalists saw officials from both sides, led respectively by Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent, enter the Swedish government building serving as the talks venue. Neither side has so far made public any information about what has gone on in the talks, which started on Monday. The negotiations are happening in the wake of a US-EU trade deal struck over the weekend that set US tariffs on most EU imports at 15 per cent, but none on US goods going to the EU. The truce between China and the United States, the countries with the worlds two top economies, has temporarily set US duties on Chinese goods at 30 per cent, and Chinese levies on US ones at 10 percent. That accord, reached in Geneva in May, brought down triple-digit tariffs each side had levelled at the other after a trade war sparked by US President Donald Trump spiralled into a tit-for-tat bilateral escalation. The 90-day truce is meant to end on August 12. But there are indications both delegations want to use the Stockholm talks to push the date back further. The South China Morning Post, citing sources on both sides, reported on Sunday that Washington and Beijing are expected to extend their tariff pause by a further 90 days. Trump has threatened to hit dozens of other countries with stiffer tariffs from Friday this week unless they agree to trade deals with Washington. Among them are Brazil and India, which he has warned could be targeted for 50-per cent tariffs. The US leader has already announced deal outlines with five countries —Britain, Vietnam, Japan, Indonesia and the Philippines — as well as the one with the 27-nation EU. Beijing says it wants to see "reciprocity" in its trade with the United States. Foreign ministry spokesman Guo Jiakun said dialogue was need "to reduce misunderstandings". The previous round of of China-US talks was held in London. Analysts said many of the trade deals Trump has been publicising were leaning more on optics than on details. Stephen Innes, managing partner at SPI Asset Management, a firm that advises on currency exchange and commodities, said an extension of the 90-day truce between China and the United States could reinforce that view. "That truce could set the stage for a Trump – (President) Xi (Jinping) handshake later this year — another risk-on carrot for markets to chew," he said.

Iran's SLAL tenders for 120,000 metric tons corn, traders say
Iran's SLAL tenders for 120,000 metric tons corn, traders say

Zawya

timean hour ago

  • Zawya

Iran's SLAL tenders for 120,000 metric tons corn, traders say

HAMBURG - Iranian state-owned animal feed importer SLAL has issued an international tender to purchase up to 120,000 metric tons of animal feed corn, European traders said on Tuesday. The deadline for submission of price offers in the tender was also Tuesday, July 29, they said. Shipment is sought in the full month of August. The corn can be sourced from Brazil, Europe, Russia, Ukraine or elsewhere in the Black Sea region. Payment problems for Iranian businesses because of Western sanctions had made participation in recent tenders from Iran difficult, traders said. Food is exempt from Western sanctions on Iran over its nuclear programme, but sanctions have hit Iran's financial system, creating complex and erratic payment arrangements. Traders said immediate cash payment was offered in the tender, but the terms of payment would be negotiated during the purchase. Price offers should be made in euros, they said. (Reporting by Michael Hogan, Editing by Louise Heavens)

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store