Xinhua News Agency, Frankfurt, April 17　Summary | US tariff policy drags down growth prospects ECB announces another rate cut

　　Xinhua News Agency reporter Ma Yueran Liu Xiang

　　The European Central Bank announced on the 17th that it would lower the three key interest rates in the euro zone by 25 basis points respectively. This is the bank's seventh rate cut since June last year. Analysts believe that the recent abuse of tariffs in the United States has quickly heated up market concerns about euro zone exports, inflation and economic outlook. The European Central Bank needs to achieve multiple goals such as controlling inflation, preventing recession, and preventing risks. In the future, monetary policy formulation may be more cautious.

　　As US tariffs have recently led to a surge in global trade tensions, the uncertainty faced by the eurozone economy has risen significantly. European Central Bank President Lagarde said global trade frictions, financial market volatility and geopolitical tensions are hitting corporate investment confidence, weakening households' willingness to consume, and exacerbating the downward risks of the eurozone economy. Lagarde pointed out that trade tensions may hinder exports, and the imposition of tariffs by the United States may also lead to supply chain adjustments, deterioration of market confidence and tightening of financing conditions, which will have a substantial drag on the economic growth of the eurozone.

　　Kasten Brzeski, head of macro research at Dutch International Group, said that US tariff policies have changed the market's expectations for global economic growth. The rapid appreciation of the euro, the decline in energy prices and changes in external demand have jointly exacerbated the pressure of input-type deflation faced by the euro zone.

　　The latest data shows that inflation in the euro zone continues to fall, with overall and core inflation both showing a downward trend in March, and the increase in service prices has slowed significantly in the past few months, while wage growth has shown a slowdown and corporate profits have fallen. At the same time, the momentum of economic growth in the eurozone is still insufficient, and the relaxation of the financial environment has failed to effectively stimulate the willingness of enterprises and residents to finance.

　　Mark Wall, chief economist at Deutsche Bank, believes that the European Central Bank may take further interest rate cuts against the backdrop of falling inflation and weak economic growth. But he also pointed out that the premise of this forecast is that inflation and wage levels remain moderately adjusted.

　　In addition, several experts pointed out that the current monetary policy of the European Central Bank is lagging. Ulrik Carstens, strategist at Deutsche Asset Management, said that although financial conditions have gradually been loosened, companies and residents are still in a low sense of actual borrowing and investment out of concerns about the economic outlook, and monetary policy transmission has not been fully effective.

　　Capita macro analyst Jack Allen Reynolds said that if the trade frictions worsen, the European Central Bank is forced to take more aggressive interest rate cuts.

[Editor in charge: Gu Yue]