The European Central Bank (ECB) kept interest rates unchanged on Thursday amid ongoing economic uncertainty, particularly stemming from U.S. tariffs under former President Donald Trump.

Markets had anticipated a near-certain 2% key deposit rate, marking the second consecutive hold after the ECB cut rates in June from last year’s record high of 4%.

The ECB noted that inflation in the eurozone remains around its 2% medium-term target and emphasized a data-dependent approach to future rate decisions, offering little guidance on the next steps.

Concerns persist over global trade tensions, including U.S. tariffs on EU exports and potential retaliations, which could negatively affect growth, investment, and consumption across Europe.

Eurozone economic growth remains sluggish, with just 0.1% expansion in the second quarter, and ECB President Christine Lagarde acknowledged that while trade uncertainty has lessened, it has not returned to pre-COVID “normal” levels, CNBC has reported.

The bank continues to balance maintaining inflation targets with navigating risks from volatile trade policies and global economic pressures.