ECB Expected to Maintain Interest Rates Amidst Lingering Uncertainty

The European Central Bank (ECB) is expected to maintain its benchmark interest rate at its upcoming meeting on June 14-15, continuing the cautious approach it has taken throughout the first half of 2025. This decision is based on the ECB's own forecasts, which show a likelihood of 99.5% that the ECB will keep the deposit facility rate at its current level of -0.5%. The ECB has been maintaining its current interest rate range since December, citing uncertainty around the potential impact of various economic factors, including the ongoing COVID-19 pandemic and geopolitical tensions. Like the Federal Reserve in the United States, the ECB has been under pressure from governments and some members of the public to cut interest rates, but has so far resisted these calls. Keeping the rate unchanged would signal ongoing caution from the ECB as it continues to monitor how various economic policies will play out. "Recent ECB commentary has reinforced a wait-and-see approach, with officials signaling little urgency to adjust policy amid increased uncertainty around the economic outlook," said Chief Economist at Oxford Economics, Andrew Goodwin, in a research note. While consumer sentiment has improved somewhat, the uncertainty brought on by various economic factors hasn't fully faded. The inflation rate also ticked up slightly in May to 2.3%, compared with 2.2% in April. Even though economic growth is slowing, the labor market continues to hold up, with employment gains exceeding expectations last month. "The current data do not support that theory that prices are rising or that the labor market is weakening quickly," said Brian Mulberry, client portfolio manager at Zacks Investment Management in an email to CBS MoneyWatch. The ECB's decision to hold rates steady may be unwelcome news for borrowers in the eurozone, but it would bode well for savers who benefit from higher interest rates. Now is a good time for people to shop for high-yield savings accounts or to lock in CD rates. "Those returns aren't as high as they were a year ago, but they're still really strong," said Greg McBride, chief financial analyst at Bankrate, in an email.