Instant View: ECB cuts rates again to buffer economy from U.S. tariff hit

Reuters

Thu, Apr 17, 2025, 5:52 AM 5 min read

LONDON (Reuters) - The European Central Bank chopped involvement rates for the seventh clip successful a twelvemonth connected Thursday, looking to prop up an already struggling euro portion system that volition instrumentality a sound from U.S. tariffs.

Policymakers were unanimous successful approving the chopped connected Thursday, arsenic adjacent immoderate of the much hawkish complaint setters agreed that a planetary commercialized warfare has importantly altered the outlook, a root told Reuters.

The euro extended falls aft the determination and was past trading astatine $1.1339, down 0.5% connected the day, having traded astatine $1.1367 conscionable before.

Germany's 2-year enslaved output was past level astatine 1.75%, having traded astir 1.807% earlier.Europe's wide STOXX 600 scale was down 0.3%, holding little connected the day.

COMMENTS:

ANDREW KENNINGHAM, CHIEF EUROPE ECONOMIST AT CAPITAL ECONOMICS:

"While the ECB’s determination to chopped its deposit complaint from 2.5% to 2.25% contiguous was expected, the monetary argumentation connection intelligibly points to further argumentation easing to come. The connection says the outlook for maturation has “deteriorated” owed to “rising commercialized tensions”. And it notes that “increased uncertainty is apt to trim assurance among households and firms” and the marketplace effect to the commercialized tensions “is apt to person a tightening interaction connected financing conditions”. So each other equal, the ECB believes monetary argumentation volition request to beryllium much accommodative than antecedently expected."

STEVE RYDER, SENIOR PORTFOLIO MANAGER, AVIVA INVESTORS:

"Little implicit 3 weeks agone the marketplace was questioning whether the ECB would skip an April complaint cut, contiguous arsenic present wide expected the ECB delivered a 25 bps reduction. U.S. tariffs person accrued risks to planetary maturation which has besides enactment downward unit connected commodity prices and upward unit connected the Euro. These factors are present weighing connected ostentation expectations. Whilst the outlook for the EU country remains highly uncertain, we judge it's close for the ECB to instrumentality argumentation rates into the neutral scope set and the removal of the restrictive stance and a much information babelike attack is an acknowledgment of these accrued risks.

Our presumption has been that the equilibrium of risks to argumentation rates stay to the downside, this is nevertheless present good priced by markets and truthful we are present neutral connected European rates. In the mean word we spot respective supportive factors for the Euro country which we judge enactment steeper output curves."

DEAN TURNER, CHIEF EURO ZONE ECONOMIST AT UBS GLOBAL WEALTH MANAGEMENT, LONDON:

"Policymakers are seeking to onslaught a equilibrium betwixt dovish impulses—such arsenic concerns implicit growth, inflation, and ongoing commercialized conflicts—and much hawkish developments, peculiarly successful narration to fiscal policy, notably from Germany.