Eurozone inflation stabilizes at two percent, rates to remain steady

In July 2025, the inflation rate in the Eurozone reached exactly two percent, according to estimates from Eurostat, the EU's statistics office. This marked a continuation of the stable inflation rate observed in the previous month, June 2025. The European Central Bank (ECB), tasked with managing monetary policy in the Eurozone, has set a medium-term target of maintaining inflation at this two percent level. The stability in inflation has prompted some analysts to suggest the ECB will refrain from further interest rate cuts during this period. Allan Sørensen, chief economist at Dansk Industri, emphasized that the current interest rate approaches neutral levels, and any further reduction may lead to unwanted inflationary pressures. Previously, the ECB had executed eight consecutive interest rate cuts before maintaining the current rate in a decision made after a meeting at the end of July. Some experts, including Sørensen and Sören Kristensen, chief economist at Sydbank, have projected that, barring significant economic downturns, the ECB is likely to remain steadfast in their current monetary policy. Kristensen pointed out that core inflation, which excludes volatile items such as food and energy, has slightly surpassed the two percent target, standing at 2.3 percent in July, the same level noted in June. Kristensen has forecasted that inflation will maintain a reasonable and low profile within the Eurozone, influenced in part by the EU’s restraint in responding to American tariffs on various goods. Retaliation to these tariffs has been limited, potentially allowing for lower import prices and a dampening of inflationary pressures within the region. This ongoing condition of inflation stability and the reasons behind it suggest that the ECB’s cautious approach may continue. The central bank is likely vigilant about overly altering interest rates, mindful of the adverse effects these changes can have on inflation dynamics. In conclusion, while the ECB seems set to hold its course regarding interest rates for the foreseeable future, the situation remains fluid and subject to change based on evolving economic indicators and growth forecasts. Therefore, analysts continue to observe inflation metrics closely to gauge potential shifts in the ECB’s monetary policy stance in the context of both domestic and international economic factors.