ECB cuts rates as Trump tariffs raise fears for eurozone growth

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Frankfurt: The European Central Bank (ECB) on Thursday reduced interest rates that US President Donald Trump’s stop -start tariff announcements could endanger growth in the Eurozone.

ECB President Christine Legarde said at a press conference that the rate of rising trade tensions was working in the context of “extraordinary uncertainty”.

Lagarde said Trump’s prices have increased the risk that growth in the euro zone could slow, while inflation on inflation was “less than clear”. During the turmoil, the ECB decided to reduce interest rates to a quarter point, the sixth consecutive time, which reduced the debt costs. Kit left the benchmark deposit rate 2.25 %, the lowest in early 2023.

The ECB has reduced interest rates rapidly from the middle of the previous year, as inflation has withdrawn from the central bank’s 2.0 % target.

In the euro zone, consumer prices increased by 2.2 % clip in March, with the ECB saying that the inflation process was “well on track”. But the threats of swing tariffs on global imports in the United States in the United States have led to a “widespread increase” in trade tensions, Ligarde said.

The ECB said that the economic uncertainty is “likely to reduce the confidence between homes and firms”, while tensions in the market will create severe financing conditions.

Uncertainty of inflation

Berseky said that the ECB was “very surprised” on Thursday, saying that the ECB was “very surprised” on Thursday.

Going at this week’s meeting, ECB policymakers had little guess what tariff rates would be applied to the translatable trade. The US president unveiled the ‘Liberation Day’ revenue in early April, with global markets for 90 days, including the European Union, before being immediately stopped for dozens of countries, already promoted global markets.

A basic 10 % tariff rate on imports in the United States is in its place, and Trump has also imposed 25 % tax on automotive, steel and aluminum sectors. “The global trade tension and its associated uncertainty will reduce the growth of the euro area, though its effect was less clear for inflation.

Of the potential effects, China, which has faced the highest US prices, can divert goods to Europe. This, combined with the strength of the euro against the dollar, “suggests that prices will be easier in the euro area.”

‘Forty’

Berzesky said the trade tension was “clearly eliminating the previous candidate”, which was born from the largest member of the euro zone, Germany, to open the expense taps.

The government, led by Frederick Mirza, has put hundreds of billions of euros in additional cash for defense and infrastructure, which gives it a promotion that can be felt throughout Europe.

Lagarde noted that increasing investment can “strengthen manufacturing” and increase growth in the euro zone. He said, but in view of geographical political tensions, it was more important “to move forward with financial and structural policies, which would make the euro zone more” fruitful, competitive and flexible. “

He said that the large number of open questions arising from the global trade tension means that the ECB will have to be more “more” than ever in response to progress.

“We have to be prepared for unexpected people, doubling the ECB’s” data and meeting -to -meeting, “depending on the data and meeting by meeting. While Lagarde played his card near his chest in relation to future rate decisions, analysts said the door was open to further reduce its interest rate for the ECB.

Nichasch said Thursday indicated that the ECB was “ready to take action to counter uncertainty in financial markets”.