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Supporting ECB's Hold: Patience Is Key to Taming Stubborn Inflation

Published July 26, 2026 at 4:03 PM UTC

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The ECB's decision to leave rates unchanged is the right call for an economy still grappling with lingering price pressures. While headline inflation has dropped, core inflation—especially in services and wages—remains uncomfortably high, at over 4%. Prematurely cutting rates could reignite inflation, undoing the progress made by the most aggressive tightening cycle in ECB history. Keeping rates steady allows policymakers to see whether the current slowdown will cool inflation further without risking a new spike. Corporations that have passed on higher costs to consumers may need to absorb them if demand weakens, helping to bring down prices. The hold also avoids unsettling financial markets, which value predictability. For savers, the pause maintains attractive deposit rates. The ECB's credibility depends on not declaring victory too early. Waiting a few more months is a small price to ensure that inflation genuinely returns to target, protecting the purchasing power of all eurozone citizens.