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Published on Thursday, June 5, 2025 | Updated on Friday, June 6, 2025

Europe | The ECB near the end of the rate cutting cycle

Summary

The ECB cut rates to 2% with broad consensus and signaled the rate-cutting cycle may be nearing its end. While confident in the inflation path, high geopolitical and trade uncertainty keeps future decisions open.

Key points

  • Key points:
  • The ECB cut rates by 25bp to 2.0%, with broad support across the Governing Council and only one dissent.
  • The ECB remains dovish on growth, with risks still tilted to the downside; shows strong confidence on inflation path.
  • Lagarde signaled the cycle is likely nearing its end and the current stance puts the ECB in a good position to face uncertainties.
  • The ECB has presented alternative scenarios dependent on tariffs, a clear signal that uncertainty is exceptionally high and that they are waiting for the outcome of trade negotiations to declare the end of this rate cycle.

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Documents and files

Report (PDF)

Informe BCE

English - June 5, 2025

Authors

CC
Carlos Castellano BBVA Research - Economist
MM
María Martínez BBVA Research - Principal Economist
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