ECB Slashes Rates Yet Again – A Big Move Amid the US Trade War
The European Central Bank decided to trim its main interest rate by another 0.25 percentage point, marking the eighth cut in ten months. They say it’s all in a bid to cushion the eurozone economy from the heat of the US trade disputes.
Why the Policy Shift?
During the recent Governing Council meeting, the ECB highlighted that the deposit facility rate – the lever they use to steer monetary policy – has been nudged down after a fresh assessment of inflation trends and how quickly monetary policy impacts the real economy.
Key voices:
- Robert Holzmann (ECB policymaker): “Let’s pause any more rate cuts until at least September.”
- Isabel Schnabel (Board member): “New shocks are emerging, and they’re bringing fresh challenges.”
Experts Weigh In
Societe Generale economist Anatoli Annenkov cautioned that the ECB must tread carefully given the unfolding trade crisis and how German fiscal easing might play into the mix.
Trump’s 50% Tariff Threat
Last month, President Trump announced a potential 50% tariff on EU goods—a move that has been flagged as “hard to handle.” It’s a headwind that’s tightening the delicate supply‑chain knot connecting U.S. and EU industries.
EU’s Optimistic Outlook
EU trade commissioner Maroš Šefčovič, speaking at the Brussels Economic Security Forum, threaded a hopeful message:
- “We’re in a highly interwoven global system. Any hitch across the Atlantic would knock our competitiveness and security pillars wide open.”
- “I’m a relentless optimist. We’ve had our ups and downs, but we’ll focus on results, stay patient, and keep strategy alive.”
- “Two mega‑economies—dotting 30% of global trade—need to cooperate. It’s better to find solutions than to keep standing on shaky ground.”
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