The ECB is done fiddling with the dials. Martins Kazaks, one of the loudest voices on its Governing Council, said the central bank is now entering a “monitoring” phase instead of constantly trying to shape the economy. Kazaks told reporters on Sunday that the ECB’s job for now is to keep an eye on things, not to intervene. “We’ve seen good news, we’ve seen bad news, but not sufficiently big news to lead to a rethink of what we would need to do,” he said. The ECB has already slashed interest rates eight times, dragging the deposit rate down to 2%. But in July, the policymakers hit pause. And next month, they’re expected to keep things steady again. Kazaks shuts down talk of another rate cut When asked about the idea of another interest rate cut, Kazaks didn’t hesitate. He said a small 25 basis-point cut would be pointless at this stage. “Another 25 basis-point cut won’t shift the economy massively,” he said. “It’s more like an insurance story in my view.” For him, that kind of cut isn’t needed. His Finnish colleague, Olli Rehn, backed that up. Rehn also spoke in a separate interview, saying, “Any ‘insurance cut’ just for its own sake wouldn’t be necessary.” Kazaks believes the market understands the message. “Markets understand us,” he said, noting that traders don’t expect another reduction this year, and that aligns well with how the ECB is looking at things. The September meeting will bring new projections, and Kazaks said those forecasts will guide any future moves. But for now, “we remain data dependent,” and “if we see that there is a need to move, then we move.” The June projections showed that inflation could drop to 1.6% in 2026 but rise again to 2% by 2027. Wage growth has slowed, just like the ECB expected, and manufacturing might finally be coming back to life after three years of struggle. Kazaks said that while inflation is where it needs to be, early next year might see a temporary dip. “We know that at the beginning of next year, we will somewhat undershoot but of course the question is, how it’ll start to rebound,” he said. EU’s trade deal faces criticism but gets defended Outside of interest rates, the broader economic picture still has cracks. A new trade agreement between the EU and the United States has reduced some uncertainty, but the 15% tariffs still sting. The tariff applies to most European exports and won’t be going away anytime soon. Kazaks said there’s some concern about cheap Chinese goods being redirected into the region, which adds more downside risks for growth. European Commission President Ursula von der Leyen defended the deal in a column published in Frankfurter Allgemeine Zeitung , calling it “a strong, if not perfect deal.” She said the agreement avoids a damaging escalation with the US and adds a layer of economic stability. “A trade war between the European Union and the US would have been celebrated by Russia and China,” she wrote. She warned that retaliatory tariffs could’ve hurt workers, consumers, and industries across Europe. Ursula said that while other US trading partners had extra tariffs slapped on top of old ones, the EU’s 15% tariff was “all inclusive,” giving European goods a cleaner path into the US market. “That allows European goods to access the US market under more favorable conditions,” she wrote, “which gives EU companies a significant advantage.” The deal was hashed out last month in Scotland between Ursula and US President Donald Trump. It hasn’t gone over well in Brussels, where lawmakers and industry groups are still fuming. But the paperwork is moving forward. Last week, both sides agreed on next steps to lower tariffs on European cars and hinted at future discussions about steel and aluminum. Brussels isn’t done pushing. Officials still want better terms for wine and spirits after failing to secure exemptions. German Chancellor Friedrich Merz also backed the deal on Saturday. He said the tariffs will drag on Germany’s economy but added that a full-blown trade war with Washington would’ve been worse. The smartest crypto minds already read our newsletter. Want in? Join them .
