Inflation in the euro area is on the right track. (Photo: Freepik, Who is Danny)
Frankfurt am Main – What does Trump’s customs orgy mean for Europe? The situation changes almost every hour. Yesterday Italy’s head of government Giorgia Meloni was at Trump, some hopes for special tariffs. Either way: that the European Central Bank once again lowers interest rates is considered agreed.
Because when it comes to inflation, the euro area is on track, 2.2 percent Price buoyancy in March Are close to the ECB’s 2 percent goal. The core rate without energy and food was also declining with 2.4 percent in the annual comparison. The high service inflation weakened to 3.4 percent.
After The ECB’s interest decision in March With a reduction of 0.25 percent, the deposit rate, which is important for savers and loans, is currently 2.5 percent. The main refinancing sentence to which banks receive fresh money is currently noted at 2.65 percent and the top -refinancing rate at 2.9 percent.
Another situation in the USA – ECB has changed Wording
The situation in the United States is completely different: the US Federal Reserve is now holding The key interest rate has been stable for 3 sessions – at the significantly more restrictive level of 425 to 450 basis points. The tariffs are likely to dampen the economy, but also drive prices – a dilemma for the Fed.
The ECB Council flanked the last interest rate in March with new rhetoric. After 6 steps since June 2024, the monetary authorities have described monetary policy as “significantly less restrictive” for the first time. A new language regulation that probably takes into account the interest of the interest on the level of inflation.
Growth forecast lowered – downward risks by tariffs
But Trump’s customs announcements are a miracle bag. It is controversial how US tariffs affect euro inflation, especially since they also play against tariffs and the trade war with China. Quite sure but duties slow the growth – the ECB has Your forecast 2025 already reduced to 0.9 percent.
The ECB had overtaken the new trade reality, says Ulrike KastensSenior Economist Europe at DWS. “The significant increase in tariffs to European exports to the United States and the associated uncertainty has significantly increased the downward risks for the economy in 2025.”
Positions of the ECB decision-maker-market forecast euro
The location is complicated-no wonder that the views of the ECB decision-makers diverge. The French central bank boss François Villeroy de Galhau pleads For rapid interest reductionswhile his Austrian colleague Robert Holzmann currently sees no reason.
For the time being, the markets expect the European central bankers to support the economy even more in the current year. While the deposit rate expected for the end of 2025 was 2 percent, the bets now go Rather towards 1.75 or 1.5 percent.