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Essentials of Monetary Policy

According to the European Central Bank (ECB)

July 24, 2025
Mirza Shaheryar Baig
Foreign Exchange Strategist

According to the European Central Bank (ECB)

  • The ECB kept rates unchanged at 2.00%, in line with expectations.
  • The central bank is firmly on hold and watching for downside risks from trade uncertainty. 

Implications

The ECB is content to wait at 2% until there is more clarity on tariffs. Inflation is now described as “at” rather than “around” the 2% target. The committee also remains comfortable with its June projections which take inflation below target in 2026.

Downside risks to the economy continue to be dominated by “exceptional” trade related uncertainty.

We expect at least one more rate cut this year which is consistent with market pricing of one cut by December. However if reports of the EU and the US closing in on a trade deal prove accurate, we will consider removing the rate cut from our forecast. 

2025 Schedule of Central Bank Meetings

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.