The European Central Bank (ECB) has elected to hold interest rates steady after previously cutting them in June of this year.
The decision keeps the ECB’s main interest rate at 3.75% and comes after headline inflation in the European Union dipped to an annualized 2.5% in June from 2.6% in May.
However, core inflation, which excludes volatile food and energy prices, was unchanged in June at 2.9%, giving the ECB reason to pause on interest rate cuts.
The decision to keep interest rates at current levels was widely expected among economists and investors.
“Domestic price pressures are still high, services inflation is elevated, and headline inflation is likely to remain above the target well into next year,” said the ECB in a news release.
June had marked the European Central Bank’s first interest rate cut since 2019 and came days after the Bank of Canada lowered its benchmark interest rate by 25-basis points.
Analysts say the ECB is likely to wait for more data on wages, economic growth and productivity before making any further rate cuts.
A majority of futures traders expect two more 25-basis point interest rate cuts this year, in September and December.
