The European Central Bank (ECB) is set to announce its interest rate decision on Thursday, July 24, 2025 at 4:15 PM GMT+4. Markets broadly expect the ECB to hold its main deposit rate steady at 2.15%, reflecting continued uncertainty about inflation trajectories, global trade tensions, and the strength of the euro.

  • Hold at 2.15% 
     
  • 2.15% 
     
  • 1.4% 
     
  • U.S. tariffs, euro appreciation, disinflationary pressures from China 
     

The Likely Outcome: Hold Steady

ECB policymakers appear inclined to maintain the status quo following the June rate cut. Economists note that the central bank has entered a “wait-and-see” phase, with little incentive to adjust rates unless significant data surprises materialize. According to Berenberg's Salomon Fiedler, "The ECB will prefer to wait and see if anything actually pushes them out of the equilibrium they find themselves in.

U.S. Tariffs: The Wild Card

While no new macroeconomic forecasts are scheduled for this meeting, U.S. tariff threats potentially as high as 30%, are weighing heavily on policy discussions. That level far exceeds the 20% worst-case scenario modeled in June. Analysts anticipate that ECB President Christine Lagarde would adopt a cautious stance, emphasizing the need to reevaluate downside risks without coming out as reactive.

September or December? The Market’s Split Bet

Markets are divided on whether a rate decrease in September or December is likely, given that the ECB’s interest rate decision is anticipated to pause in July. A single cut could be justified for a mild tariff scenario of 10–15%. However, economists think two cutbacks would be justified if more stringent trade policies are implemented, since the GDP growth of the Eurozone might be impacted by up to 0.5% in 2026.

Disinflation Fears Grow

Disinflation is no longer a distant risk, it’s here. The ECB’s own projections show inflation dipping to 1.4% by early 2026, far below its 2% target. If tariffs prompt a wave of cheap Chinese goods entering the EU market, deflationary forces could intensify. However, Germany's fiscal expansion could balance out some of these effects, adding an upside risk.

ECB Interest Rate Decision for July 2025: The Euro’s Surge Adds Complexity

The euro has appreciated nearly 17% since February, peaking near $1.18, and is widely expected to touch $1.20 in the next 12 months. While recent pullbacks offer short-term relief, the ECB’s models were based on $1.13, creating a divergence that could affect inflation forecasts. Some, like BNP Paribas, now see this as a key factor supporting a September cut.

Technical Analysis: EUR/USD at a Crossroads


 

Figure 1.1: EUR/USD (Daily Timeframe) on TradingView

Since bottoming in mid-December to the beginning of March, EUR/USD has been on a steady uptrend, gaining nearly 14%. The pair recently tested a strong resistance zone near 1.170, a level not seen since 2021, and is showing signs of consolidation.

  • 1.145–1.158 zone 
     
  • 1.1820 (key level) 
     
  • RSI nearing overbought (54), MACD showing bullish momentum 
     
  • Outlook: A short-term fall into support may occur if the Fed maintains its aggressive stance while the ECB suggests dovishness. On the other hand, evidence that the ECB would not be cutting might push the EUR/USD over 1.180 and closer to 1.200. 
     

Final Thoughts

Although rates are unlikely to alter as a result of Thursday's decision, the ECB's underlying tone and future guidance will be crucial. Policymakers are under pressure from trade threats, disinflation, and currency strength, so any change in message might cause volatility in the euro and other markets.

 

Explore Forex Trading now