European Central Bank (ECB) Governing Council member Fabio Panetta emphasized the need for caution in reducing interest rates due to heightened uncertainty, primarily stemming from U.S. trade policy announcements.
Since June, the ECB has implemented six rate cuts, most recently lowering its key deposit rate to 2.5% in March. However, Panetta warned that the fight against inflation is not yet over. He highlighted the impact of unpredictable U.S. trade policies and called for a measured approach to monetary easing.
Panetta underscored the need to balance economic factors. While eurozone economic weakness and geopolitical tensions help contain inflation, increased uncertainty suggests avoiding premature rate cuts. He reiterated the ECB’s commitment to data-driven decision-making and vigilance in maintaining stability.
ECB President Christine Lagarde echoed this sentiment today, stating that managing inflation remains a "daily struggle." She noted the importance of staying on course amid global uncertainties, particularly in light of the upcoming U.S. announcement on tariffs set for April 2.
With no consensus on the ECB’s next move, policymakers await March inflation data, expected to show limited improvement. Lagarde emphasized a cautious approach, focusing on thorough data analysis rather than premature forecasts, ensuring price stability remains the central objective.