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The European Central Bank will likely hold off on making another interest rate cut Thursday, choosing to wait until it can measure the size of any economic blow from higher US tariffs. The ECB has already cut rates eight times since June of last year and President Christine Lagarde said after the last policy meeting June 5 that the central bank is getting to the end of a monetary policy cycle." The monetary authority for the 20 countries that use the euro currency has been lowering rates to support growth after raising them in 2022-2023 to snuff out inflation caused by Russia's invasion of Ukraine and the rebound after the pandemic. With the bench mark rate now at 2 per cent, down from a record high of 4 per cent, analyst think there could be one more rate cut coming, but only in September. The reason, say analysts: The ECB's policymakers simply don't know the outcome of talks between the EU's executive commission and the Trump administration. Trump first set a 20 per cent tariff
The head of the European Central Bank said inflation has become more unpredictable due to shocks like the COVID-19 pandemic and Russia's invasion of Ukraine and that policymakers need to take the possibility of such extreme scenarios into account and communicate them to the public as well. The world ahead is more uncertain, and that uncertainty is likely to make inflation more volatile, European Central Bank (ECB) President Christine Lagarde said Monday in a speech opening the central bank's annual conference in Sintra, Portugal. It's pretty basic but that's the reality. One reason, she said, was that increasingly regular supply disruptions were leading companies to change their prices more frequently, a habit that goes beyond the recent burst of inflation in the US and Europe and reflects a structural shift in how firms operate under conditions of permanently higher uncertainty. The bank's assessment of the economy needs to rely on taking extreme possible scenarios into account as
The impact of a potential trade war with the United States and massive increases in European defence spending and government borrowing loom over a policy meeting Thursday at the European Central Bank, which is expected to cut interest rates by a quarter percentage point. Analysts are widely expecting a cut in the European Central Bank's (ECB) benchmark deposit rate to 2.50 per cent, a step to lower borrowing costs for consumers and businesses in an economy that's struggling to get out of first gear. The bank's monetary policy statement and post-meeting news conference by President Christine Lagarde will be scrutinised for hints about how far the bank will cut rates amid concerns about weak growth. The bank has already reduced the benchmark rate by 1.25 percentage points since June. Meanwhile new concerns that would massively reshuffle the economic picture are likely to intrude: the potential impact of new tariffs on European imports from US President Trump, which could slow growth,
With US President-elect Donald Trump threatening new tariffs and political chaos engulfing France, the European Union's second largest economy, the question ahead of the European Central Bank meeting Thursday is not whether it will cut interest rates, but by how much. Analysts see a quarter-point rate cut from the current ECB benchmark rate of 3.25% as the most likely option when the bank's rate-setting council meets at its skyscraper headquarters in Frankfurt. But the prospect of a half-point cut isn't out of the question for the bank and its President Christine Lagarde as new risks that emerged since the bank's last meeting on October 17 cast a shadow over an already tepid recovery from a post-pandemic stagnation. Trump's election victory on Nov. 5 heightened the prospect of a more protectionist U.S. trade policy, such as new or higher tariffs on imported goods, after he takes office on Jan. 20. That sends a cold chill through the business world in Europe, where exports are an ...