“European Central” reduces interest for the seventh time amid concern about the trade war

The European Central Bank reduced interest rates today, Thursday, for the seventh consecutive time to face concerns about economic growth, which was made by the customs duties imposed by US President Donald Trump.

The bank announced in a statement that “growth expectations have deteriorated due to the escalation of commercial tensions.”

He pointed to a “extraordinary state of certainty” regarding the future of the economic situation, saying that “future interest rate decisions will be taken on the basis of each meeting separately.”

The bank’s move is expected to support economic activity in the twentieth countries that use the euro currency by making credit within the reach of consumers and companies.

The bank’s interest rate determination council decided at a meeting in Frankfurt to reduce the reference interest rate by a quarter of a percentage point to 2.25%. The bank continues to reduce interest rates steadily after raising it sharply to combat inflation between 2022 and 2023.

Now, after low inflation, growth concerns are the focus of attention. The economy of the twentieth countries that use the euro with a modest rate of 0.2% in the last three months of 2024.

The inflation rate was 2.2% in March, which is close to the bank’s goal of 2%. This reduction was widely expected by analysts due to the sudden influence of Trump Declaration on April 2 of unexpectedly expected customs duties on the expectations of the growth of the euro area, starting from 10% and reaching 49%. The European Union faces customs duties by 20%.

For her part, European Central Bank President Christine Lagarde said during a press conference commenting on the bank’s decisions that economic expectations are foggy due to the trade war, indicating that the fragmentation of global supply chains may affect inflation.

“European governments should give priority to reforms that enhance growth. Urgent need for more productive and competitive policies for the eurozone countries,” she added.

The head of the European Central Bank confirmed that inflation “shows signs of stability near our target levels at 2% and we see a decline in the spending of consumers in the euro area.”

She pointed out that uncertainty dramatically controls the prospects for economic growth, as the horizon of economic growth has deteriorated strongly in the trade war.