30 May
ECB’s Muller suggests major rate cuts may be needed to boost eurozone economy
The European Central Bank (ECB) is likely to have to cut interest rates to levels that spur the economy if uncertainty in global trade starts weighing more heavily on the bloc’s GDP growth, according to ECB Governing Council member Madis Muller.
The official noted that borrowing costs have now reached levels that are no longer restraining demand. Muller emphasized that by its June meeting, the ECB will have greater clarity on the progress of US-EU trade talks and will make its final decision based on up-to-date macroeconomic data.
While US trade policy is clouding economic forecasts, the probability of an eurozone recession remains low, the official said. Muller added that euro appreciation could provide temporary disinflationary effects via cheaper imports, but would likely have minimal impact on consumer prices.
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