Traders now put the probability of an ECB rate cut at the September 11 meeting at well under 30%, down from roughly 50% before reports of a potential 15% EU–U.S. tariff agreement emerged.
After delivering eight rate reductions over the past year, the European Central Bank left policy rates unchanged this week. ECB President Christine Lagarde struck an upbeat tone, saying monetary policy is in a “good place” while cautioning that trade-related disruptions could reignite inflation. Her remarks helped push two-year German government bond yields higher by more than 10 basis points, to about 1.90%.