ECB Officials Signal Further Rate Cuts Amid Inflation Outlook and Trade War Concerns

European Central Bank (ECB) officials are increasingly voicing support for further interest rate cuts ahead of the next policy decision. Factors such as declining energy prices and the euro's appreciation bolster arguments for easing monetary policy, according to ECB board member Piero Cipollone. He suggested current conditions make further easing conceivable, anticipating the inflation target might be reached sooner than projected. However, voices from Germany, including Bundesbank President Joachim Nagel, express caution regarding additional cuts. ECB President Christine Lagarde highlighted risks from a potential EU-US trade conflict. A 25% US tariff on European imports could reduce Eurozone growth by 0.3% in 2025, with EU retaliation potentially increasing the impact to 0.5%. The ECB has already cut key rates six times since June 2024, bringing the deposit rate to 2.50%. The central bank forecasts a 2.3% inflation rate for 2025, aiming for a 2% target.