ECB Policymakers Signal Interest Rate Hold Amid Inflation Stability, Trade Uncertainty

European Central Bank policymakers Madis Müller and Gediminas Šimkus emphasize a cautious approach regarding further interest rate changes, suggesting a pause in rate adjustments for the near future. Müller highlighted that inflation has essentially reached the ECB's 2% target and economic growth is recovering, making it reasonable to hold rates steady in July and potentially avoid further cuts unless the euro area economy weakens significantly. Šimkus echoed this sentiment, noting that uncertainty around trade negotiations with the United States and geopolitical factors, including military and infrastructure spending, justify waiting for clearer information before making additional moves. Both policymakers acknowledged the euro's rapid appreciation against the dollar but currently do not see it as a major concern, although Šimkus warned that volatility in foreign-exchange and energy markets could cause inflation to deviate from the target. The ECB is expected to decide on a meeting-by-meeting basis amid an unpredictable environment, with any potential rate cuts more likely toward the end of the year. Overall, the central bank is balancing the current stable inflation outlook with external risks, opting for patience in its monetary policy adjustments.