ECB holds interest rates steady at 2%

{"text":[[{"start":9.53,"text":"The European Central Bank has held its benchmark interest rate at 2 per cent for the second consecutive meeting as it stressed the resilience of the Eurozone economy despite higher US tariffs on most of the bloc’s goods."}],[{"start":23.71,"text":"Thursday’s decision was in line with economists’ expectations and came after ECB president Christine Lagarde said in July that rate-setters had switched to a “wait-and-watch” mode after reducing borrowing costs eight times since last year.  "}],[{"start":42.150000000000006,"text":"“The domestic economy is showing resilience, the labour market is solid and risks are more balanced,” Lagarde told journalists after Thursday’s decision, adding that inflation was “where we want it to be”."}],[{"start":null,"text":""}],[{"start":57.38000000000001,"text":"The interest rates decision was the first since the EU struck a trade deal with US President Donald Trump at the end of July, which imposed 15 per cent tariffs on most of the bloc’s goods."}],[{"start":70.78000000000002,"text":"Risks to economic growth had become “more balanced”, Lagarde said. Trade uncertainty had “clearly diminished” she added, although she noted it was still above the “normal level”."}],[{"start":81.78000000000002,"text":"Eurozone inflation rose to 2.1 per cent in August, exceeding the ECB’s 2 per cent target for the first time since April. "}],[{"start":92.52000000000001,"text":"In revised forecasts, the ECB said it now expected annual inflation of 1.7 per cent in 2026, up from its previous forecast published in June of 1.6 per cent."}],[{"start":106.76,"text":"ECB staff expect the Eurozone economy to grow 1.2 per cent this year, compared with their June forecast of 0.9 per cent, marking the first upward revision of GDP forecasts since March 2024. At the same time, they lowered their forecast for GDP next year to 1 per cent from 1.1 per cent previously."}],[{"start":132.96,"text":"Lagarde declined to comment on the collapse this week of the French government and the deepening crisis over the country’s debts."}],[{"start":142.16,"text":"The fall of Prime Minister François Bayrou’s government has brought the yield on the country’s 10-year bond to about 0.8 percentage points above benchmark German Bunds — close to its highest level since the Eurozone debt crisis."}],[{"start":159.84,"text":"“The next major challenge for the ECB is probably not inflation,” said Robert Greil, chief strategist at Merck Finck. “It lies rather in Europe’s political and fiscal risk landscape.”"}],[{"start":174.08,"text":"Lagarde stressed that the possibility of the ECB intervening in the bond market was “not discussed at all in the course of our governing council meeting”. Sovereign bond markets were “orderly and functioning smoothly with good liquidity”, she said."}],[{"start":190.93,"text":"The ECB’s toolkit to deal with potential crises was flexible, Lagarde stressed. Its so-called Transmission Protection Instrument — created in 2022 to fend off “unwarranted, disorderly market dynamics” by buying bonds and never used so far — was “not a straitjacket”, she said. “The discretion of the governing council always exists.”"}],[{"start":215.77,"text":"She implored European governments to embark on more pro-growth reforms and “strategic investment” to lift the bloc’s competitiveness."}],[{"start":224.81,"text":"“For the ECB to cut [rates] meaningfully from here, we would need to see persistently below target inflation or stagnant growth, neither of which appear very likely,” said Mercer analyst Julius Bendikas."}],[{"start":238.99,"text":"The euro was up 0.4 per cent by late afternoon trading at $1.174, as US economic data hit the dollar. Traders pointed to Lagarde’s remarks that economic growth had become more balanced — a change from the ECB’s last meeting when she had said that risks remained “tilted to the downside”."}],[{"start":262.63,"text":"Bets on future interest rate cuts remained largely unchanged, with swaps markets putting a roughly 20 per cent chance on a quarter-point cut before the end of the year."}],[{"start":277.36,"text":"The ECB’s series of rate cuts, which began in June last year, has pushed borrowing costs to the lowest level since December 2022."}],[{"start":295.09,"text":""}]],"url":"https://audio.ftmailbox.cn/album/a_1757645474_8356.mp3"}