The eighth cut of the ECB rates in one year should be the last, unless an additional economic earthquake brought by theUsa protectionist offensive. A move such as to force Frankfurt to put your hand back to the monetary policy.
In this sense, in the conference with which he announced the scissor of 25 basis points, which brought the rate on deposits to 2%, Christine Lagarde left an open glimmer. There are a few hours now the analysts ready to bet on an additional eurotower intervention.
For the next meeting of the Board of Directors, scheduled for July 24, a stop is expected to scissor, but Donald Trump has set the way to the duties of 50% for Europe from 9 July. A’escalation in the commercial war It could bring heavy repercussions on the growth of the Eurozone.
The cutting of the rates
With the last cut of the rates, Lagarde said that “we are approaching the end of a cycle of monetary policy “, started to respond in recent years” to shocks that have added to each other, including Covid, the war in Ukraine and the energy crisis “.
According to reports from the number one of the Eurotower, the ECB has achieved the target of 2% of the level of inflation, which will go down to 1.6% next year thanks to the collapse of energy prices, confirming a trend so encouraging as to bring Frankfurt to decrease by 0.3 percentage points the estimates for the next two years.
The downward reviews on inflation and the royal rate arrived in zero practice have allowed President Lagarde to declare that monetary policy is “well positioned to face uncertainties” on the international scenario, starting with the duties.
Circumstances, however, not enough to avoid an economic shock that requires a new ECB intervention by the end of the year.
The repercussions of the duties on the GDP
“A further exacerbation of commercial tensions in the coming months would determine levels of growth and inflation lower To those of the basic scenario of the projections, “explained the economists of the Eurotower.
The estimates on GDP of the euro area were reconfirmed by Frankfurt to 0.9% in 2025, while they are revised compared to the March forecasts from 1.2% to 1.1% in 2026.
With 20% duties on European goods, 120% on Chinese goods, and retaliation of the EU, the ECB estimates a drop in the GDP of 0.4 percentage points this year and 0.5 in the next.
After the new forward escape of Trump, if the ongoing negotiations between the USA and the EU do not go through, further tariffs would be triggered from 9 July up to 50% against Europe, which could aggravate the picture even more.
For this reason, in the face of a dominant uncertainty about the world economy, Lagarde has reiterated once again that the ECB will move “meeting for meeting, led by data”.
