The ECB held all three key policy rates steady in July 2025, maintaining the deposit rate at 2.00%, refinancing rate at 2.15%, and lending rate at 2.40%, following 200 bps of cuts since June 2024.

• Inflation is “broadly in line” with projections, with headline inflation now at the 2% medium-term target.
• Borrowing costs have eased notably, with non-financial corporate rates down -147 bps YoY (May 2024 to May 2025), supporting economic resilience.
• Wage growth is moderating, with Q1 2025 negotiated wages rising just 2.45% YoY (vs 4.15% in Q4 2024), reducing upside inflation risks.
• The ECB cited “exceptionally uncertain” global conditions, especially unresolved EU–US trade tensions, as a key reason for the pause.
• Lagarde emphasized downside risks to growth from higher tariffs, a stronger euro, and financial market volatility, but also signaled a “wait-and-watch” posture going forward.