17
Apr
Apr
ECB RATE CUT ALL BUT CERTAIN AS GLOBAL MARKETS REACT TO TRUMP’S TARIFF ANNOUNCEMENT
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CapitalTimesNews / 1 week
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- 2 min read
The European Central Bank is expected to cut interest rates for the seventh time this year, with economists predicting a 25 basis point reduction to 2.25%. According to ECB President Christine Lagarde, the bank’s monetary policy stance remains attentive to market movements, particularly exchange rates, which impact inflation and economic growth. Lagarde emphasized that the ECB doesn’t target specific exchange rates but monitors them closely. The euro’s trade-weighted exchange rate recently hit an all-time high, making imports cheaper and potentially lowering inflation. However, this could slow economic growth as exports become more expensive. “We remain attentive to movements since they impact inflation and need to be factored into economic models,” Lagarde said. She added that the ECB is always ready to act and has a solid track record in devising new instruments when required. “In Europe and in the euro area in particular, it can be observed that market infrastructures and… the bond market (are) functioning in an orderly fashion,” Lagarde noted. Traders are pricing in a 25 basis point cut, a move that was previously seen as uncertain but gained momentum after Trump’s tariff announcement. Societe Generale suggested a larger 50 basis point cut could be possible to exit a restrictive monetary policy stance. The ECB’s interest rate decisions are crucial in shaping the eurozone’s economic landscape.
