8 April | Euro

ECB may accelerate monetary easing due to growing risk of recession in Europe — Reuters

ECB may accelerate monetary easing due to growing risk of recession in Europe — Reuters

New import tariffs announced by US President Donald Trump strengthened the case for the European Central Bank (ECB) to cut interest rates at its April 17 meeting. Besides, the pace of monetary easing is expected to gain momentum, Reuters says.

Markets now forecast two reductions in borrowing costs in the ECB's next two meetings, as well as three or four cuts before the end of this year. According to the news agency, the risk of a recession in the EU has risen due to US trade policies. Therefore, supporting the bloc’s economic growth could become a bigger issue than bringing inflation down to the 2% target, Reuters adds.

A raft of influential ECB officials, including Francois Villeroy de Galhau, Yannis Stournaras, and Pierro Cipollone, have called for broader monetary easing in the current situation. 

Some policymakers questioned the ECB's projection that the US tariffs and the EU's retaliation would lower the bloc’s GDP growth by 0.5% in the first year. The officials believe the impact would be more significant.

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