London (Reuters) – European Central Bank broke interest rates for the seventh time in a year on Thursday, looking to boost the euro zone economy that is already struggling that will take a knock from US tariffs.
Policy makers were unanimous in approving the recess on Thursday, as even some of the more Hawkish rate installers agreed that a world trade war had significantly changed the forecasts, a source told Reuters.
The euro extends the falls after the decision and was last trading at $ 1.1339, down 0.5% on the day, after trading at $ 1.1367 slightly before.
Germany's 2 year bond products were always at 1.75%, after trading about 1.807%earlier. Stoxx 600 wide index was wide down 0.3%, holding lower on the day.
Comments:
Andrew Kenningham, chief European economist at Capital Economics:
“While the ECB's decision is expected to break its deposit rate from 2.5% to 2.25% today, the monetary policy statement clearly highlights clearly to relieve further policy to come. The statement states that the forecasts for growth have” declined “because of” rising trade tensions “and states that” more uncertainty is likely to be likely to be considered likely to be probable “. Believe that monetary policy will need to be more hosted than previously expected.
Steve Ryder, Senior Portfolio Manager, Aviva Investors:
“Just over three weeks ago the market questioned whether the ECB would waive the April rate cut, today as is now widely expected for the ECB to achieve a reduction of 25 BPS. US tariffs have increased risks to world growth which has also put pressure down on the prices of goods and weight up on the euro. These factors are now leaning on the area. Rates for the neutral range band and remove the restrictive stance and a more dependent approach to data in recognition of these increased risks.
Our view is that the balance of risks to policy rates remains to the disadvantage, however, this is now well priced by markets and so we are now neutral at European rates. In the medium term we see several support factors for the euro area that we think steeper product curves support. “
Dean Turner, chief eurozone economist at UBS Global Wealth Management, London:
“Policy makers are trying to balance Dovish stimuli – such as concerns about ongoing growth, inflation and conflict – and more Hawkish developments, especially in relation to financial policy, especially from Germany.
Importantly, the ECB keeps its options open in terms of future interest rate route. We expect that another rate will be broken in June, with the possibility of relieving further later in the year, depending on how trade negotiations are moving forward. “
Kirstine Kundby-Nielsen, EG Analyst, Dankse Bank:
“It has a dovish mood. Focus has moved to look at the risk of the growth prospects, rather than an upside -down risk to inflation.”
“It is growing that they focus on because of the uncertainty of the trade policy.”
Marchel Alexandrovich, Economist, Saltmarsh Economics:
“With no clarity on the scale and the impact of US tariffs, the ECB blocks the political noise and responds to the weaker than expected domestic inflation data. Another 25-BP rate breaks interest rates pushes closer to neutral and the governance council drops the word” restrictive “from a break in its statement.
Natasha May, World Market Analyst, JPMorgan Asset Management:
“The ECB chose to continue today, adhering to their proven formula from a 25-BP rate cut along with a few to no future policy route guidelines. This could seem a sensible strategy, given huge uncertainties about future global trade links. But given the economic background, the ECB does not need to be so hesitant.
Wherever tariff rates are settled, most ECB governance members appear to agree that trade tensions will weigh more on the activity of the euro area-and so medium-term inflation-nag that they will promote prices directly. This suggests that the ECB should take rates lower than its estimated 1.75 to 2.25%neutral range, especially given almost season -derived deflation pressure from stronger euro and lower energy costs. “
ZSOLT KOHALMI, Head of Global Real Estate and Joint CEO, Advisor Pictet Alternative:
“Looking ahead, we expect the central bank to continue to relax monetary policy: the euro area economy is expected to grow by less than 1% this year, and inflation is expected to fall below 2% in 2026. Several rate fractures will mean that headgear in recent years for real estate can turn direction and become tail winds.”
Yael Selfin, Chief Economist, KPMG:
“The ECB stayed carefully in its statement, choosing to keep its options open, in the midst of the ongoing trade uncertainty. However, the ECB highlighted that the forecasts have deteriorated, noting that it is likely to continue to relieve rates at upcoming meetings.
(Reported by the Reuters Markets team, compiled by Dhara Ranasinghe; edited by Amanda Cooper)
