There duties war launched by American president Donald Trump has opened new scenarios e New roads for the ECB and the Federal Reservewhich could be at the crossroads between fighting inflation or recession and, therefore, which path to take with interest rates. A need that is most felt overseas, but somehow also concerns the Eurotower, which will be the first to meet after the Liberation Day and the turbulence that shocked i stock and bond markets. The ECB board will meet Thursday 17 April And a quarter of point is almost obvious.
What to expect for Thursday
The expectations of the market also indicate for this meeting the possibility of a Tax cuts in the order of 25 basis pointswhich would bring the rate on deposits to 2.25% and the repo (main) to 2.4%. Currently, the markets are made up to three cuts of the European Central Bank, after the one now discounted in April, reporting a rate on deposits at the end of 2025 between 1.5% and 1.75%. Cuts that can take place in the summer (in May I am not on calendar meetings) or in the autumn between September and December.
The Trump effect on the markets
The universal duties system announced by Trump on April 2, now known as Liberation fromy, he made the world bags collapse, making the shock wave also arrive at theUS bonda market that should have moved in contrast and, instead, saw splashing yields (symptom of greater risky) and collapse the prices like the shareholder. A movement that has been variously explained by the market observers who still remains little understandable today.
The inflation data
This week I am also scheduled for Eurozone inflation datakey variable to which the ECB has linked its decisions. The final data of March should confirm a slowdown in the tendential growth of‘Core indexwhich excludes energy, food and tobacco, at 2.4% from 2.6% of the previous Merse. Given that it had already been below expectations. But the ECB will also analyze the long -term perspectives, In light of the duties imposed by Trump and the countermeasures of the EU, which have inflationary effects. The dominated theme, however, will be uncertainty, since the duties have been temporarily suspended by Trump in what has been seen as a “step back”.
The expectations of analysts
“The ECB appears more open Compared to the Fed in continuing the cycle of cuts And recent turbulence on the duties have increased the probability a further cut of 25 basis points already in April “, they notice the analysts of General Investment, adding that “the ECB seems more confident nshe trajectory of descent of inflationeven if it must be said that the announcement of expansive tax policies in Germany could have an impact on the term rate of this cycle of accommodation of monetary policy “.
“We still plan that the ECB cuts the deposit rate at 2% by June. The next path is more uncertain and will depend on the extent and duration of mutual duties and the potential response of European political decision makers, “says more cautiously Markets 360the division of BNP Paribas dedicated to research and analysis on the markets.
Analysts of Rabobanck they also see the ECB to the “crossroads” And they add another cut of the rates in April, compared to the one already expected for June. “The fickle Trump tariff policies represent one Remarkable challenge for the ECB. Not only is the direction to follow is not clear, but now there are many crossroads. – underline the experts – Trump has ordered a 90 -day suspension, which reduces the impact on growth, for now. However, it can change your mind at any time. This political uncertainty He is already affecting confidence.
Also for analysts of Ing, The ECB will be “forced” to cut the rates on Thursday, also for rebalancing the exchange rate and curb the rise of the euro. “Looking to the future, the ECB is facing at least two main challenges. – the experts say – the commercial tensions in progress e the high level of uncertainty They could force it to cut interest rates more than currently willing to admit. At the same time, the strengthening of the euro exchange rate, not only against the dollar, will exercise greater disinflationary pressures on the eurozone. Anticipate part of these pressures could push the ECB to open, at least verbally, leads it to an accommodating monetary policy “.
