ECB goes on vacation in a “good position” to deal with uncertainty

After eight interest rate cuts, the European Central Bank (ECB) opted to maintain its key interest rates at 2%, a level in line with the most recent inflation, highlighting the uncertainty created by the international tariff and geopolitical environment. Lagarde expressed confidence in the strength of the economy, considering the central bank to be "in a good position," but acknowledged at the end of the conference that interest rate hikes cannot be ruled out in the not-too-distant future, given that tariffs could either aggravate or alleviate prices.

Markets were taking this decision for granted, while still keeping open the possibility of a further cut, but only after September – a possibility that Lagarde did not definitively rule out. The ECB president began by highlighting how the economy surprisingly performed positively in the first quarter, although much of this momentum was driven by an anticipation of orders, given fears of a tariff escalation.