The decision comes after the extraordinary volatility of the market last week after the announcement by American president Donald Trump of 10% of prices on board all trade partners, as well as 25% tariffs on aluminum, cars and steel.
The prospect of a total world trade war has seriously attenuated the hopes of block growth decision-makers, whose trade is closely linked to that of the United States
Even with the reduction of quarters, increased uncertainty was likely to “reduce confidence between households and businesses,” said the ECB, adding that the “unfavorable and volatile response to the market for trade tensions” would have a tightening effect on credit. This analysis has echoed the regular bank loans of the bank, which ended earlier this week.
The bank has also changed the language of its March meeting to underline the growing discomfort on the economy, by exchanging “increasing uncertainty” for “exceptional uncertainty”. In addition to this, he reiterated his desire to use emergency bonds purchase tools to support the economy in the event of an economic crisis.
Earlier this month, the president of the ECB, Christine Lagarde, suggested that the first year of increased negotiation restrictions could drop 0.3% reduction on the gross domestic product of the euro zone. The Bundesbank leader, Joachim Nagel, was more blurred, suggesting that the block prospects were “massively deteriorated”, despite a planned increase to spend in defense at the EU level and in national capitals.
The ECB had increased rates from 0% to 4.5% between July 2022 and September 2023 to combat inflation supplied by the pandemic and the invasion of Ukraine by Russia.
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