The ECB also reduced its 2026 inflation viewing, which cited the economic possibilities of the weak proximity and frequent global trade risks. Inflation of services has become first stubborn, quite cold. Nevertheless, Lagard indicated factors such as protecting the European Union and increasing the infrastructure expenses that could support medium -term development.
American trade policy induces risks to eurozone growth
On the further assessment of the ECB, the weight of concerns on the American trade tariff was heavy. Trump’s renewed conservationist trend is expected to reduce the export and trade investment of the euro sector. While manufacturing has seen short -term benefits from stockpiling, service activity is slowing down. Lagard acknowledged these risks, stating that the business can reduce growth and inflation by another increase of stress.
The decline in strong euros and energy prices also strengthens disruptive pressures, strengthening expectations that the ECB’s easy cycle can slow down. Some economists have warned that inflation may fall below the target next year, continuously revives memories of the pre-memeriot era of underscoring.
Market reaction and investor status
Market participants are now pricing in July in high probability of a rate stagnation. Goldman Sachs and analysts of the shroders are expected to have one or two more cuts this year with deviations in ideas. The ECB’s cautious stance has been welcomed by the bond markets, traders draw their attention to fiscal development and geopolitical risks.