On Thursday, the European Central Bank reduced interest rates while political decision -makers clashed with increased economic uncertainty, in particular chaotic trade policies of President Trump, which should weaken the region’s economy.
Political decision -makers, which set rates for the 20 countries that use the euro, lowered their key rate by a quarter of a point to 2.25%. It was the seventh consecutive cup since June while economic prospects are darkening and inflation has slowed down.
The region is faced with the double challenges of prices on goods sent to the United States and a decrease in demand for exports to other countries, because commercial uncertainty weighs on the global economy. The greatest economy in Europe, Germany, is strongly oriented towards exports.
“Economic prospects are obscured by exceptional uncertainty,” Christine Lagarde, president of the Central Bank, said on Thursday at a press conference in Frankfurt, adding that all members of the board of directors of the bank have unanimously accepted the drop in rates.
Trump has raised prices on almost all imports in the United States from most of the countries to 10%, increasing the spectrum of a world trade war. There are also higher prices on certain goods such as cars and steel, while a trade war with China has pushed the imports between each country above 100%.
There is always the threat that higher prices will be imposed again on dozens of countries after Mr. Trump’s expiration at 90 days on reciprocal prices. The Trump administration is negotiating with countries, but the European Union could again face a tariff of 20%.
