The European Central Bank (ECB) has kept its policy rate unchanged after seven consecutive interest rate cuts for the first time in 10 months.
On the 24th (local time), the ECB held a monetary policy council meeting in Frankfurt, Germany, and announced that it had left the policy rates, including the deposits rate (2.00%), the benchmark rate (2.15%), and the marginal lending facility rate (2.40%), all unchanged.
As a result, the gap between the eurozone (20 countries using the euro) policy benchmark of deposits rate and Korea's benchmark rate (2.50%) is 0.5 percentage points, while it is maintained at 2.25 to 2.50 percentage points compared to the United States (4.25% to 4.50%).
The ECB noted, "Domestic price pressures are continuing to ease, and the pace of wage growth is also slowing down," adding that "the recent incoming data generally aligns with previous inflation outlook assessments." It continued, "While the economy has shown resilience overall even in a difficult global environment, at the same time, the environment is exceptionally uncertain, especially due to trade disputes."
Since changing its monetary policy direction last June, the ECB has lowered the policy rates a total of 2.00 percentage points over eight occasions. Notably, between last September and last month, it lowered rates by 0.25 percentage points at each of the seven monetary policy meetings.
The ECB stated that the rate cut last month was in preparation for uncertainties stemming from the United States' trade disputes. Christine Lagarde, the ECB President, also expressed last month that "we are nearing the end of the monetary policy cycle," indicating a pause in rate cuts while awaiting the outcome of tariff negotiations.
Currently, the eurozone deposits rate is entering the midst of the neutral rate range (estimated at 1.75% to 2.25%) that neither stimulates nor slows the economy. Last month, the eurozone's consumer price inflation rate was also at 2.0%, which is the ECB's target.
However, there are concerns that if the euro continues to remain strong and the economy faces downward pressure due to trade disputes, prices may fall below the target for an extended period. As a result, there are projections that the ECB may lower the policy rate by an additional 0.25 to 0.50 percentage points at the remaining three meetings this year, depending on forthcoming economic indicators.