The European Central Bank left its three key interest rates unchanged on 24 July, breaking a year-long easing cycle that had lowered borrowing costs by 200 basis points since September 2023. The deposit facility stays at 2.00%, the main refinancing rate at 2.15% and the marginal lending rate at 2.40%. The Governing Council said inflation has returned to its 2% medium-term goal and that incoming data broadly confirm its previous outlook, with domestic price pressures and wage growth continuing to moderate. It credited earlier rate cuts for keeping the euro-area economy “resilient,” while warning the external environment remains “exceptionally uncertain,” particularly because of unresolved trade disputes with the United States and a stronger euro. President Christine Lagarde told reporters the decision was unanimous and reaffirmed a meeting-by-meeting, data-dependent stance. She cautioned that higher tariffs and currency strength could damp corporate investment, even as indicators suggest underlying inflation will stabilise around target. Risks to growth remain tilted to the downside, and the ECB stands ready to use all instruments—including the Transmission Protection Instrument—should market conditions worsen. Money-market pricing still implies a high probability of at least one more 25-basis-point cut by year-end, but Lagarde refused to provide forward guidance, saying it is too early to gauge the net impact of possible trade disruptions on prices. The pause leaves policy rates near the midpoint of the ECB’s estimated neutral range and puts the focus on incoming data ahead of the next meeting.

The European Central Bank has authorised Banca Monte dei Paschi di Siena to proceed with its proposed acquisition of Mediobanca, according to statements from the Italian lender and people familiar with the decision. The green light, given by the ECB’s supervisory board and awaiting formal ratification by the governing council, removes the main regulatory hurdle to one of the largest unsolicited bank takeovers in Italy in years. The approval covers scenarios in which Monte Paschi secures either a majority holding or a stake of less than 50% in Mediobanca. Under the decision, the Siena-based bank must submit a detailed integration plan to the ECB within six months of completing the deal, outlining capital, funding, IT and governance arrangements. Should the eventual stake fall below 50%, Monte Paschi is required within three months to demonstrate de-facto control or set out an alternative strategy for its holding. Monte Paschi aims to launch its all-share exchange offer next month. It can count on the backing of prominent Mediobanca investors, including the Del Vecchio and Caltagirone families, who together own about 30% of the target. The Italian Treasury, which retains an 11.7% stake in the bank it rescued in 2017, supports management’s push to expand as industry consolidation accelerates amid falling interest rates.

The European Central Bank is expected to keep borrowing costs unchanged at its July policy meeting, according to officials familiar with the Governing Council’s thinking. Policymakers see little immediate benefit in cutting rates while they assess the damage from President Donald Trump’s sweeping tariffs, including the 145% levy on Chinese goods that took effect in April. While the trade measures have begun to crimp euro-area export demand and cloud the growth outlook, ECB officials believe financial conditions remain sufficiently supportive and prefer to preserve their limited rate ammunition in case the downturn deepens, people with knowledge of the discussions said. Market pricing still assigns a chance of easing later in the year if data deteriorate. The stance contrasts with mounting pressure on other central banks to act as global industry and investment adjust to the escalating U.S. trade confrontation. Governing Council members will update forecasts at the September meeting, which several officials have signaled as the earliest juncture for possible policy action should the external shock intensify.

European Central Bank officials have stepped up warnings that the euro remains ill-equipped to challenge the U.S. dollar’s supremacy in either traditional reserves or the fast-growing market for crypto stablecoins. Governing Council member Gabriel Makhlouf told a conference on 5 July that the euro "cannot yet replace the dollar’s dominant role" because the bloc still lacks full fiscal integration and a safe asset comparable to U.S. Treasuries. The alarm intensified in a 28 July ECB blog post that said dollar-linked stablecoins already command about 99 % of the roughly $250 billion token market, leaving euro-backed versions with a capitalization below €350 million. Widespread use of such tokens in the euro area could erode the ECB’s ability to steer money supply, the paper warned. ECB adviser Jürgen Schaaf added on 29 July that a forthcoming digital euro by itself "won’t challenge U.S. dollar stablecoin dominance," arguing the EU needs regulated, private-sector euro stablecoins to preserve monetary sovereignty. Across the Atlantic, BlackRock strategists said new U.S. legislation—the Genius Act—will solidify dollar leadership by giving issuers clear rules for dollar-pegged coins. The contrast underscores the ECB’s call for Europe to move quickly or risk deeper dependence on the greenback.

The European Central Bank will run a thematic stress test in 2026 that asks euro-area lenders to pinpoint the firm-specific geopolitical scenarios—ranging from higher tariffs and sanctions to cyber attacks—that could most severely hit their solvency, Supervisory Board Chair Claudia Buch told the European Parliament. Rather than prescribing a single macroeconomic shock, the ECB will set a target level of capital depletion and require banks to identify the events that could trigger it. Supervisors have separately instructed institutions to intensify monitoring of both direct and indirect cross-border exposures and to build additional provisions if needed. Buch noted that while asset quality remains solid—euro-area banks ended 2024 with a 15.9% common-equity Tier 1 ratio, a 5.9% leverage ratio and a non-performing loan ratio around 2%—higher trade barriers risk eroding creditworthiness and profitability, particularly in pockets such as commercial real estate. Investors are taking the latest guidance in stride. Shares in European banks rose 1.9% on 29 July to their highest level since September 2008, helped by analysis from Alvarez & Marsal suggesting lenders will perform better in the current supervisory examination than they did two years ago. Results of the European Banking Authority’s 2025 EU-wide stress test are scheduled for early August, after which the ECB’s 2026 geopolitical exercise will become the sector’s next major hurdle.

The European Central Bank is granting lenders additional time to prepare for forthcoming thematic and regulatory reviews, according to people familiar with the decision. The move means banks will receive earlier notice of their inclusion in investigations, giving them longer lead times to assemble documentation and address preliminary queries. Supervised institutions had previously raised concerns that short preparation windows strained compliance resources. By lengthening the notice period, the ECB aims to improve the quality of information submitted and reduce the risk of last-minute delays, while preserving the scope and rigor of its supervisory examinations. The central bank has not publicly specified the new deadlines, but officials indicated the extension applies to reviews scheduled for later this year.

The European Central Bank’s Governing Council has completed its latest strategy assessment, confirming that a symmetric 2 % inflation target will remain the cornerstone of euro-area monetary policy. The updated framework, released on 30 June, states that the ECB will deploy “appropriately forceful or persistent” measures whenever inflation moves markedly above or below the goal, and keeps the full range of existing instruments— from interest-rate adjustments to asset purchases— at its disposal. President Christine Lagarde said the overhaul gives the institution a stronger foundation to fulfil its price-stability mandate in an environment that is likely to be more volatile because of factors such as geopolitical fragmentation, wider use of artificial intelligence, demographic change and climate risks. The first Governing Council meeting operating under the new strategy is scheduled for 23–24 July 2025, and the next comprehensive review is planned for 2030. Reinforcing the message, Governing Council member Jose Luis Escriva told Spain’s Expansión newspaper on 1 July that the symmetric 2 % objective should remain the ECB’s “primary guide.” Escriva called for vigorous action at critical moments but patience when shocks prove temporary, echoing the balance of agility and persistence laid out in the refreshed strategy.

The European Central Bank (ECB) is expected to postpone any reduction in interest rates despite the economic challenges posed by tariffs imposed by former U.S. President Donald Trump. Market analysts and reports indicate that the ECB plans to maintain current borrowing costs at its upcoming meetings, choosing to delay rate cuts amid ongoing uncertainties related to the tariff dispute between the U.S. and the European Union. This cautious approach reflects the ECB's decision to monitor the evolving trade tensions before implementing monetary policy adjustments.

European Central Bank Executive Board member Piero Cipollone said cash remains “indispensable” both as a payment instrument and a store of value, even as the ECB accelerates work on a digital euro. Speaking as the bank unveiled redesigned banknotes, Cipollone argued that a central-bank digital currency would complement, not replace, physical money and pledged to keep notes widely accessible. An accompanying ECB Economic Bulletin released on 4 August finds that demand for cash varies across age groups but remains robust for day-to-day transactions and for precautionary savings, challenging predictions of a near-term cashless society. The study underpins the ECB’s stance that digital innovation should build on, rather than supplant, existing forms of legal tender. The debate over legacy payment methods is playing out elsewhere in Europe. France’s Finance Ministry plans to close its last public cheque-processing centre within two years, shifting remaining volumes to a private contractor. Cheques accounted for 37 % of French transactions in 2000 but only 3 % in 2024; the Treasury handled 39 million cheques last year, a 72 % drop in 15 years. Unions warn that up to 50 jobs are at risk, while officials say the move reflects dwindling demand and rising processing costs.

European Central Bank Governing Council member Mario Centeno said the euro-area economy remains too weak to return inflation to the ECB’s 2% goal without additional monetary support, according to an interview with Italy’s La Stampa published on Sunday. Centeno, who also heads Portugal’s central bank until shortly before the ECB’s 23-24 July meeting, argued that interest rates must stay compatible with an economy still struggling with subdued supply and demand conditions. He signalled openness to further rate reductions, despite the ECB having lowered borrowing costs for the eighth time this year earlier in June and having indicated a likely pause in July. “The level of rates must be compatible with an economy that generates stable inflation at 2%. Today that economy does not yet exist in the euro area,” Centeno said, adding that policy decisions will continue to be taken “meeting by meeting.”

European Central Bank supervisors have told euro-area lenders to tighten monitoring of both direct and indirect cross-border exposures as geopolitical tensions intensify. According to senior central-bank officials, the watchdog is scrutinising risks stemming from sharply higher tariffs, the threat of cyber attacks—especially in the Baltic region—and the possibility of a global shortage of US dollars should Federal Reserve liquidity lines be withdrawn. Supervisory Board Chair Claudia Buch said the ECB will run a thematic stress test in 2026 that will require about 110 banks to model severe geopolitical shock scenarios capable of eroding significant portions of their capital. While regulators have stopped short of ordering firms to cut positions, they are urging management to strengthen controls and draft contingency plans that could include higher loan-loss provisions. The new focus follows the ECB’s annual Supervisory Review and Evaluation Process, during which officials found early signs of asset-quality deterioration linked to trade frictions and commercial real-estate exposures. Buch warned lawmakers that prolonged tariff disputes and escalating cyber threats could undermine credit quality, underscoring the need for resilient capital and liquidity buffers across the banking system.

European Central Bank Governing Council member Olli Rehn warned on Thursday that political pressure from U.S. President Donald Trump is undermining the Federal Reserve’s independence, marking what he called the first serious test of that autonomy in decades. In a speech, the Finnish policymaker said challenging the Fed’s arm’s-length status poses “significant” risks to global financial markets and the real economy. Should the central bank’s independence collapse, Rehn cautioned, inflation would “inevitably pick up” as investors and households lose confidence in the Fed’s commitment to price stability.