For seventh time expected to reduce today (17.04.2025) interest rates borrowing or European Central Bank (ECB), a move that comes after the duties of US President Donald Trump who shocked the markets and giving up the financial prospects.
The ECB’s deposit rate expected to be reduced to 2.25% from 2.5%according to almost unanimous research by Bloomberg analysts. Only one of the 62 respondents predicts a pause, while another estimates that there will be more traffic.
The revelation of the huge US trade contributions derailed the discussions that the ECB meeting this week could bring a pause in the monetary relaxation campaign that began last June. The expectation is that the tariff measures will squeeze economic growth rather than imprinting inflation, making markets almost certain that the cost of borrowing will be reduced again.
Beyond Thursday, investors see at least two more moves by the end of the yearas a stronger euro contributes to the retention of prices pressure and increases the risk of heading low -cost Chinese products in Europe.
With the trade negotiations still underway, President Christine Lagarde is unlikely to provide clear evidence of where the interest rates will move later.
Interest rates
Officials maintained their options open after reducing the interest rates in March, as plans for more intense public spending in Germany and other countries supported calls for attention. An account of this meeting revealed that a reduction or pause was under consideration for this week.
However, Trump’s “Day of Liberation” overturned the prospects, leading to more strong support for additional relaxation by the Bank of France Governor Francois Vilua de Galo, Oli Rehn of Finland and Genimina Simkos of Lithuania, among others.
A minority nevertheless urged cautiousness. Robert Holzman of Austria said he did not see reasons for a reduction, and admitted that he was “always open to good arguments”.
Although 2% remains the most likely level In order to shape the deposit rate, the unstable setting produces a variety of views on the subject. Bloomberg’s latest survey gives a range of 1.25% to 2.25%, with more than one fifth of economists even predicting a first increase before 2026.
Financial prospects
The joy that hundreds of billions of euros in German spending on infrastructure, along with a wider European re -equipment campaign, would revitalize the overwhelming economy of Epirus was overshadowed by the gloom that the duties would exterminate much of its growth hopes.
The head of the Dutch Central Bank Claas Knot underlined the complexity of the situation, saying that the impact may vary over time and that the ECB should be “really alert”.
As far as Germany’s budget plans are concerned, a key question is how quickly the money can be spent and how this will affect inflation. A team of leading German economists has just reduced its predictions for this year, with positive impact on growth only expected in 2026.
In terms of duties, some developments after Trump’s announcement indicate greater downward dangers for inflation. The euro has been dedicated to the dollar and the European Commission’s reaction has not led to payrolls that would make imports more expensive.
‘Restrictive’ policy
One question that concerns officials is whether their political stance still restricts economic activity.
Last month they saw them modify the terminology in the statement after the meeting to declare that interest rates have become “significantly less restrictive”. This left the door open for more relaxationwhile recognizing that much of the ground has already been covered.
Another reduction would place borrowing costs more steadily within a range of estimates for the so -called neutral interest rate, which neither prevents nor stimulates growth. A further change in language or removal of the phrase appears to be possible. But the ECB may not want to offer such explicit messages to a world that requires constant adaptation.