17 April 2025
If you are covering the ECB's decision to cut interest rates, please see the following comment from Lindsay James, investment strategist at Quilter:
"As uncertainty gathers pace in the global economy, the European Central Bank has looked to remain ahead of the pack in continuing to cut interest rates sooner than other developed economies. Now this rate cut hasn’t necessarily been tariff induced given Europe has its own economic problems, but they will certainly be playing a factor in the decision making from Christine Lagarde and her colleagues.
"What will be interesting to watch is where interest rates in Europe go from here. Clearly if the tariffs announced by President Trump cause global growth to fall more than expected then extra rate cuts may be on the cards, but the ECB is likely getting to the point where it cannot accommodate many, if any, more rate cuts. It all depends on the path of inflation, and with Jerome Powell warning in the US about the risk of price rises, the ECB will be walking a tightrope should tariffs produce some level of inflation on the continent.
"Germany will certainly welcome these rate cuts with its plans to loosen the fiscal purse strings and try to invigorate some sort of growth into the economy. The ECB has removed terminology around rates being ‘restrictive’ and as such it too is clearly wanting to stimulate growth at a time of severe economic uncertainty. Whether or not it can outmanoeuvre or second guess the unpredictability of the administration in the US, however, remains to be seen."
