Eurozone companies remain optimistic, and the European Central Bank is expected to temporarily postpone lowering interest rates to observe the impact of tariffs.

A survey released by the European Central Bank on Monday showed that businesses in the Eurozone are still optimistic about their growth prospects, but are also facing pressure on profits, partly due to trade tensions. The ECB's quarterly survey on corporate financing pathways found that 8% of companies reported an increase in turnover in the past three months, while 23% are optimistic about their development in the next quarter. However, the profitability of businesses continues to deteriorate, with the impact being more widespread among small and medium-sized enterprises. In recent years, economic growth in the Eurozone has been sluggish as the anticipated economic recovery has not materialized, but businesses are maintaining high levels of hiring as they remain confident in the future improvement. The ECB noted, "Most businesses indicated that they have been somewhat affected by trade tensions, with companies exporting to the US and manufacturing companies being the most severely affected." Approximately 30% of businesses expressed concerns about delays or shortages in the supply chain, and indicated a need to find alternative suppliers. The ECB added, "In order to adapt to the changing trade environment, the main strategies adopted include shifting sales focus to domestic and EU markets, as well as readjusting supply chains." The ECB pointed out that although long-term inflation expectations have not changed, businesses' expectations for price increases over the next year have been revised down from 2.9% to 2.5%. In this context, despite the economic risks posed by US President Trump's tariff policies, the ECB may still choose to hold off on any rate cuts this week and leave potential easing measures for later. At the last decision-making meeting before the seven-week summer recess on Thursday, policymakers are likely to keep rates unchanged at 2% and postpone a response to the threat of 30% tariffs from Trump until the policy is implemented and the impact is assessable.