The European Central Bank on Thursday kept interest rates steady amid major economic uncertainty, as the European Union scrambles to negotiate a trade agreement with the U.S. before the end of the month.
The ECB has cut interest rates at each of its four meetings so far this year, taking its key deposit facility from 3% in January to 2% in June. Last year it reduced rates from a record high of 4%.
“The environment remains exceptionally uncertain, especially because of trade disputes,” the ECB said in a statement, adding that its inflation and growth outlook from June remained supported by recent data.
While annual inflation in the euro area hit the central bank’s 2% target last month, traders widely expected a hold in July — in large part due to geopolitical volatility. The U.S. is the EU’s biggest bilateral trade and investment partner and the 27-member bloc exported 503 billion euros ($590 billion) in goods to the States last year.
As of Thursday, the future of that trade relationship remained up in the air, with one possibility being a 15% baseline tariff rate on all EU imports to the U.S., along with retaliatory measures on the EU’s part.
