Aug 28, 11:35 AM

ECB Minutes Expose Inflation Rift as Governing Council Holds Rates

The European Central Bank released the accounts of its 23–24 July meeting, confirming that the Governing Council left the deposit facility rate at 2% and judged policy to be in broadly neutral territory after eight consecutive cuts. The minutes show policymakers divided on whether inflation risks are now biased higher or lower, with several members citing weaker demand and the U.S.–EU tariff dispute as downside threats, while others pointed to resilient services prices and stronger domestic demand. Council members agreed that holding rates steady would give them time to assess trade negotiations with Washington and the full impact of past easing. The account also flags that the euro-area fiscal expansion could push the economy’s ‘neutral’ interest rate upward, implying less room for additional cuts, and that the recent appreciation of the euro reflects deeper structural forces unlikely to reverse soon. High-frequency data released the same day underline the Governing Council’s uncertainty. Eurozone consumer confidence was unchanged in August at −15.5, while the European Commission’s economic sentiment index slipped to 95.2. Industrial confidence weakened marginally to −10.3 and services confidence eased to 3.6. Country figures were mixed: Italy’s consumer-confidence gauge fell to 96.2 from 97.2, and Germany’s GfK index sank to −23.6, its lowest reading this year. The soft sentiment readings highlight the fragile backdrop the ECB will confront when it next reviews policy in September.

#European Central Bank #Governing Council #Washington #Eurozone #European Commission #Italy #Germany #ECB

Written with ChatGPT .

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ECB Minutes Expose Inflation Rift as Governing Council Holds Rates

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