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Account of the monetary policy meeting of the Governing Council of the European Central Bank held in Frankfurt am Main on Wednesday and Thursday, 23-24 July 2025
28 August 2025
1. Review of financial, economic and monetary developments and policy options
Financial market developments
Ms Schnabel started her presentation by noting that financial markets had reverted to a low-volatility, “risk-on” regime, leaving the turbulence of April 2025 behind despite further tariff-related headlines. Market volatility had receded after the short-lived spike due to tensions in the Middle East, with tariff announcements by the US Administration having recently lost traction as drivers of asset price dynamics and risk assets having rallied globally since the Governing Council’s last monetary policy meeting on 4-5 June. Meanwhile, the euro area economy appeared to be more resilient to rising tariffs and elevated trade uncertainty than anticipated. Despite a further appreciation of the euro,…