Sam Miley, Managing Economist and Forecasting Lead, Cebr (The Centre for Economics and Business Research - economics consultancy) spoke to CGTN Europe. The European Central Bank (ECB) has kept its interest rate at 2%, pausing its rate-cutting cycle as it nears inflation targets and awaits the outcome of US trade negotiations. Sam interprets this as a wait-and-see approach, considering the potential impact of US-EU trade deal outcomes on the Eurozone.
00:00Meanwhile, the European Central Bank has held its benchmark interest rate at 2%.
00:05Policymakers are keeping any change on hold ahead of the August deadline for a trade deal with the United States.
00:12Last month, ECB President Christine Lagarde indicated that the bank had nearly concluded its latest rate-cutting cycle.
00:20Sam Eiley is an economist and forecasting lead at the Centre for Economics and Business Research.
00:24Joins us in studio. Sam, thank you so much for coming through to studio.
00:27So the ECB pausing rate. Why stop now?
00:31Well, I think the European Central Bank has deemed that much of the work that it needs to do in the fight against inflation is complete.
00:39We have inflation back at the central bank's targets.
00:43Many of the underlying drivers of inflationary pressure are softening.
00:48So I think now is a point where the European Central Bank deems that much of the work is done.
00:53How do you interpret this caution coming from the ECB?
01:00I mean, in light of all the tariffs and the rising tensions with the US, does it seem a strange thing to do for you?
01:05I think now is the right time for the European Central Bank to take stock on global affairs.
01:11You mentioned the volatility that has come from the potential tariff implementation from the United States.
01:18The policymakers are clearly adopting a wait-and-see approach to see exactly what the contents of any potential trade deal would be.
01:27And that would have a significant implication for the outlook for the Eurozone.
01:31And therefore, it's the right time to pause, take stock, and see where we are after the trade deal has been determined.
01:38Yeah, of course, that trade deal has until the 1st of August.
01:41No deal yet.
01:43Tariffs could go as high as 30%.
01:45They could end up much lower.
01:46And there's a whole raft of countermeasures that they use considering if the deal isn't met.
01:51So it's really an uncertain time.
01:52So against that backdrop, can you give us a sense of the rest of 2025, both in terms of potential for growth in the Eurozone and how consumer sentiment is?
02:04Sure.
02:04So the Eurozone actually started the year quite strongly in terms of growth.
02:08But we expect that to have reversed as of Q2, when the global economy was rocked by the implementation of tariffs from the US.
02:20And that is expected to have negative consequences for the demand side of the Eurozone economy.
02:26So we expect growth to be much slower in the second half of the year as well.
02:30All right.
02:31Well, Sam, thank you so much for joining us in the studio.
02:33Sam Miley is an economist and forecasting lead at the Center for Economics and Business Research.
