The poll marks a shift from July, when a majority had pencilled in a September cut. Of 72 respondents, 46 expect no change next month; just 47% still look for one more reduction this year, mostly in December.
The ECB paused in July after cumulative reductions of 200 basis points since mid-2024, and policymakers have repeatedly signalled comfort with policy near estimates of “neutral”, which several ECB figures and papers place in a 1.75%–2.25% range. With the deposit rate at the 2% midpoint, many Governing Council members see little need for immediate action while inflation is tracking target.
Price data back that stance. Eurostat’s flash estimate shows euro-area inflation at 2.0% in July, unchanged on June, with underlying measures broadly stable. Poll medians expect inflation to average around 2% through 2027, while growth projections of 1.1% for 2025, 1.2% for 2026 and 1.4% for 2027 remain little changed.
External conditions have evolved but not enough, in the view of most forecasters, to force the ECB’s hand before year-end. The new EU–US trade arrangement sets a 15% US tariff ceiling on a wide range of EU goods, including autos, pharmaceuticals and semiconductors, while leaving 50% levies on steel and aluminium in place for now. Economists in the Reuters survey judged the tariff package to be growth-negative and disinflationary at the margin, but not sufficiently so to require near-term policy easing.
Offsetting factors include fiscal support, led by Germany. Berlin has advanced a multi-year programme that combines corporate tax relief of €46 billion for 2025–2029 and record public investment plans, with ratings and policy analyses suggesting modest near-term growth effects that build over time. While the direct spillovers to the wider bloc are uncertain, additional German spending reduces downside risks in the euro area outlook cited by the ECB earlier in the summer.
Market pricing reflects the shift. Rates markets have moved towards a “higher for longer” profile centred on 2% into 2026–27, consistent with the idea that policy is already close to neutral. Analysts point to protectionism and fiscal expansion as structural forces that may keep real rates above pre-pandemic levels even as headline inflation sits near target.
The contrast with the United States is notable. US inflation firmed in July — headline CPI rose 2.7% year-on-year and core CPI 3.1% — while the labour market cooled, with payrolls up 73,000 and unemployment at 4.2%. Those dynamics have complicated the Federal Reserve’s path and fuelled debate over its next steps, even as the ECB signals patience.
Economists cited in the Reuters poll say the case for a September cut has weakened as the policy rate aligns with neutral and activity trends at or near potential. Several Governing Council members have suggested they would need clearer signs of inflation undershooting to justify further easing, a view echoed in recent speeches and interviews.
Risks remain two-sided. On the downside, the tariff shock could weigh more heavily on investment and trade than currently assumed, particularly if uncertainty persists over the final legal text of the EU–US deal. On the upside, the German fiscal impulse and associated confidence effects could lift demand more than expected, narrowing the window for further cuts. Either path would test the ECB’s judgement about where neutral lies within its stated range.
Attention now turns to the September meeting in Frankfurt (10–11 September), with President Christine Lagarde due to hold a press conference on 11 September. The final policy decision of the year is scheduled for 17–18 December, which many forecasters view as the earliest realistic slot for any additional adjustment. For now, the baseline is “steady as she goes” at 2%.
EU awaits US follow-up on tariff deal as car duties and metals plan remain unresolved
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