Europe and the United States reach a trade agreement to reduce risks, with reports suggesting that European Central Bank officials are increasingly convinced that there will be no action in September

According to informed sources, officials at the European Central Bank (ECB) are increasingly confident that they can maintain interest rates unchanged in September. These sources believe that the trade agreement between the EU and the US will not trigger significant economic concerns. They indicated that since interest rates remained at 2% last month, economic growth and inflation are largely in line with the ECB's expectations from June. This forecast suggests that inflation pressures will decline in 2026, before reaching the 2% target level again in 2027.

These sources stated that the quarterly forecast for September is likely to confirm this scenario. This would clarify the viewpoint of some officials that the ECB no longer needs to continue cutting rates and should retain policy space to respond to potential future shocks; it would also alleviate concerns from others regarding persistently low inflation levels below expectations.

After eight cuts of 25 basis points each within a year, the ECB stated in July that the threshold for further rate cuts is very high. Subsequent data revealed unexpected growth in the economies of the 20 member countries of the Eurozone, with inflation slightly above expected levels.

With the EU and the US reaching an agreement, trade-related issues have also become clearer. However, policymakers remain vigilant, as some issues remain unresolved, and US President Trump can sometimes change his mind suddenly.

ECB President Christine Lagarde stated on Wednesday, "While recent trade agreements have alleviated some uncertainty, they have not completely eliminated global uncertainty, which persists due to the unpredictable policy environment." She also noted that the current tariff levels are slightly higher than those set by the ECB in June, but "far below" the severe scenario thresholds that the bank had previously envisioned.

These views are supported by the fact that S&P Global released a PMI report on Thursday showing that business activity in the Eurozone reached its highest level in 15 months in August, but it also indicated a weakening in export orders.

However, these sources indicated that policymakers do not believe there is any benefit in supporting the economy through so-called "insurance rate cuts." They pointed out that such actions could provoke unjustified speculation about a deteriorating economic outlook and the need for a series of additional rate hikes.

They stated that if the economy suffers another significant blow, or if inflation expectations decline sharply (although this scenario is unlikely), officials may still consider lowering rates again this year.

It was also reminded that October should not be viewed as a time for action. They believe that while the quarterly forecast is an important reference in the council's deliberation process, it is not a necessary condition for taking action. They stated that no decisions have been made regarding the September meeting, and once a decision is made, all data available at that time will be taken into account Economists still expect a 25 basis point rate cut in December—three months later than their prediction in July. Traders believe the probability of this happening is less than 50%, and they have not fully priced in the possibility of more measures being introduced