ECB holds rates as eurozone growth cools and inflation risks linger

The European Central Bank kept interest rates unchanged at its June meeting, signaling caution as the eurozone shows fresh signs of slowing. Policymakers said inflation remains a concern even as economic momentum weakens across parts of the bloc.

The decision comes after second-quarter data pointed to softer-than-expected growth, adding pressure on the ECB to balance price stability with support for a fragile recovery. Uneven performance across member states has complicated the bank’s outlook and made officials more reluctant to move quickly on borrowing costs.

By holding steady, the central bank is giving itself more time to assess whether recent disinflation trends can continue without reigniting price pressures. The pause also reflects uncertainty around demand, wage growth and the broader health of the region’s manufacturing and services sectors.

Markets will now watch for new signals from ECB officials on whether rates could stay elevated for longer if inflation proves sticky, or whether weaker growth may eventually force a shift toward easing later in the year.