Publications

In its August meeting, the Central Bank's Board of Directors held its benchmark interest rate at 4.50%. In real terms, the rate stood at 2.31% , a level consistent with a neutral monetary position.

The absence of new language suggesting increased caution—despite recent core inflation stickiness—indicates that most members remain open to continuing the easing cycle, albeit at the current more gradual pace of 25 bps per meeting.

Consumer Price Index (CPI) increased by 0.23% in July 2025, in line with expectations. As a result, year-on-year inflation remained at 1.7% comfortably within the Central Bank's target range. Core inflation, which excludes food and energy also stood at 1.7%.

A rate cut in September remains a possibility if the labor market proves to be "on the edge" and weakens sharply, but that seems unlikely at this point. For now, "we have a long way to go to really understand exactly how [the tariff-related inflationary effect] will be."

At her press conference on Thursday after the ECB meeting, President Lagarde said goodbye to journalists and listeners wishing to hear more about a ‘wait and see’ holiday, an expression widely used by central bankers to imply that the next monetary policy moves will depend on how events unfold.

A global reserve currency is not just a symbol of power: it is the functional backbone of the international financial system. It is used to set prices, settle transactions, issue debt and, above all, provide liquidity. So what would happen if it didn’t exist?

The fiscal bill approval, set to push debt higher over the next decade, had puzzlingly only a muted impact on term premia and the U.S. dollar. Treasury yields also showed little movement despite renewed tariff threats, suggesting a belief the government will not follow through on those threats.

The recent appreciation of the euro against the dollar—more than 10% since the lows at the beginning of the year—has shifted the price competitiveness of Spanish companies and the purchasing power of households.