This photo taken on January 30, 2025 shows the seat of the European Central Bank in Frankfurt, Germany.
Zhang Fan/Xinhua by Getty Images
The European Central Bank is expected to attract interest rates for the third time this year, because global tariff voltages and uncertainty threaten the economic growth of the euro area.
From Wednesday, the last markets valued about 94% of the chances of reduction of interest rates a quarter of a central bank and almost 6% probability of a higher reduction by a 50-spas point according to LSEG data.
Limiting a quarter of a point would bring the ECB rate, its key foot, up to 2.25%-compared to the highest level of 4% to mid-2023.
A series of relatively fast interest rate cuts took place because inflation in the euro area was consistently below 3%, recently closing the 2% EBC target. Meanwhile, regional economic growth was poor.
When the Last Central Bank lowered the rates in March, it improved its language around the monetary policy, about which he said that “it becomes significantly less restrictive.” In January, EBC continued to characterize monetary policy as “restrictive”.
The shift of the language was interpreted by some economists as a signal that decision -makers have become more careful in further interest rates, fueling questions whether a break in the monetary soothing cycle may get through. But Global Trade and Caara Roller Coaster has shifted this view a bit from the last few weeks.
Fear of the tariff's growth
“After the March meeting, it seemed that the ECB seemed to stop at the next meeting. At the interest rates at the top of the range for neutral interest rate estimates, it looked suitable,” said Carsten Brzeski, global macro head at ING, on Monday.
“Especially since Europhoria after a German tax turn and strong European intentions to issue more security and defense have clearly improved the prospects of the euro area growth. However, since the” day of liberation “is no longer an option,” he said, suggesting that the global tariff policy caused re -concerns about the growth of the euro area.
And so “EBC is forced to cut,” Brzeski said.
Many tariff plans from the USA, along with retaliation disclosed by Washington's trading partners, have been suspended or reduced – at least temporarily – because they were imposed at the beginning of this month by President Donald Trump. But the prospects of trade, tariffs and potential macroeconomic rainfall are still dark, Ryan Djajasaputra, an economist in Investec, indicated in the note.
“Uncertainty remains high and there is still no guarantees of individual countries or the EU will not be able to agree with the US. It is also impossible that the US President will not change his politician again in the future, this is the nature of the current environment,” he said, suggesting that this confirmed the case about finishing the interest rate.
Restrictive rates?
After softening the tongue around how limiting the rates in March are, ECB can re -make corrections on Thursday.
ING from Brzeski said that the central bank “would have to change its communication”, suggesting that the central bank would mean that the lower deposit rate of 2.25%would be currently in the range of neutral interest rates “if EBC decides to continue finishing.
A topic in which the so -called neutral foot has been in the ECB has been debated hot for months among decision -makers, analysts and economists. At the neutral level, the interest rates neither stimulate nor limit the economy and can be maintained at a constant level.
EBC estimates Its neutral indicator ranges from 1.75% to 2.25%.
Economists from Deutsche Bank Research seemed more undecided before all potential language changes, saying that they believe that the language would remain unchanged on Thursday. “In combination with the view that inflation returns to the destination, it has closed pigeons.”
Perspectives of the ECB rate “faded” by the US policy
Looking at the EBC decision, it is expected that the interest rate path will be “open”, the research economists of Deutsche Bank argued.
They do not see the formulation of the ECB around forecasts regarding rates changing in relation to decision -makers, claiming that they were not initially involved in a specific path and make decisions in a way depending on the data.
“This open wording allows the attitude of the policy to remain restrictive, move on to a neutral or become stimulating depending on the data,” they said, adding that this technically means that EBC can stop the interest rate finish in June.
However, economists' forecasts adopted further rates of rates.
Dżajasaputra INVESTEC from INVESTEC in global trade Investy will depend on the path of politics and development in global trade.
“In addition to the April meeting, the ECB interest rate forecasts are cloudy on decisions regarding the policy of the White House,” he said, adding that he expected further reduction of the rate this year – although the date of this step depends on the upcoming economic data and other economic events.