ECB cuts growth, inflation forecasts amid trade war and weak demand

Inflation is now seen falling further below the ECB's 2% target next year as lower energy costs, a stronger euro and weak economic growth all weigh on prices

The European Central Bank cut some of its growth and inflation projections on Thursday as the fallout from a global trade war is likely to prove a drag for the 20-nation euro zone. 

Inflation is now seen falling further below the ECB's 2 per cent target next year as lower energy costs, a stronger euro and weak economic growth all weigh on prices. 

Price growth will then rebound in the following year and come back to target, the ECB predicted. 

A muted outlook for both economic growth and inflation is why the ECB cut interest rates again on Thursday, lowering the deposit rate by a combined 2 percentage points since last June. 

That may not be enough, however. Markets see between one and two more rate cuts this year as growth remains anaemic and there is no meaningful rebound on the horizon. 

The following are the ECB's projections for inflation and economic growth. Previous projections from March are in brackets:-

 

Year	GDP Growth (%)	Previous GDP (%)	Inflation (%)	Previous Inflation (%)
2025	0.9	0.9	2.0	2.3
2026	1.1	1.2	1.6	1.9
2027	1.3	1.3	2.0	2.0