ECB Expected to Cut Interest Rates to 2.25% Amid Economic Strains

The European Central Bank is widely expected to cut interest rates again, marking its seventh reduction in a year, as eurozone inflation eases and economic growth remains sluggish amid escalating U.S. tariff pressures under President Donald Trump. Economists anticipate a 0.25 percentage point decrease in the benchmark deposit rate to 2.25%, a move aimed at supporting the struggling eurozone economy and countering the negative effects of U.S. trade measures, which include new tariffs on cars, steel, and aluminum. While inflation has dropped near the ECB's 2% target, trade uncertainties and the threat of further tariffs have heightened concerns about eurozone growth, pushing policymakers away from pausing rate cuts. ECB President Christine Lagarde has emphasized a data-driven approach, warning that escalating trade conflicts could significantly impact eurozone growth prospects. Market observers are closely watching for signals about the ECB’s future strategies, as further fiscal stimulus in Germany could prompt future rate hikes if inflation resurges. The ECB's decision is also being shaped by volatile financial markets and fluctuating currency values, as the euro strengthens and global economic uncertainty persists.