The European Central Bank (ECB) is expected to keep interest rates at 2 per cent this week, as the weak dollar and trade diversion from China continue to dampen inflation risks. Despite the still uncertain fallout from US tariffs, a kind of equilibrium has settled on the euro zone economy with inflation and interest rates both steady at 2 per cent. Hence, it sees interest rates rising again, but not until 2027. ECB chief Christine Lagarde said officials must ensure food inflation eases. Speaking in Florence, where the ECB holds its policy meeting this month, Lagarde said food inflation was “still up and it’s more up than” headline inflation.
