Eurozone GDP Surprise May Halt Further ECB Rate Cuts

Commerzbank says stronger Eurozone growth could keep the ECB from cutting rates further, as private consumption recovers and inflation risks persist.

Key Takeaways

Eurozone GDP unexpectedly grew in Q2, easing recession fears.

Commerzbank’s Vincent Starmer says stronger growth may delay or halt further ECB rate cuts.

Rising consumption could fuel inflation pressures, leading the ECB to keep rates steady.

ECB Faces Tougher Path to More Rate Cuts

The European Central Bank (ECB) may hold off on additional rate cuts after the Eurozone economy showed stronger-than-expected growth in the second quarter, according to Commerzbank strategist Vincent Starmer.

In a new report, Starmer noted that private consumption is recovering, though at a slightly slower pace than the prior quarter.

“Higher economic growth could push up prices, so the ECB is likely to keep its key interest rate at its current level,” Starmer said.

What This Means for Markets

Investors had priced in more rate cuts for late 2025 and early 2026.

Stronger GDP figures may shift expectations and strengthen the euro.

Inflation remains the key factor for future decisions, but monetary easing may now be on pause.