ECB Policymakers Consider Interest Rate Cut

FRANKFURT (Reuters) – Some European Central Bank (ECB) policymakers see a high chance of a further interest rate cut in June due to trade war impacts and market turbulence, according to four sources.

The ECB lowered borrowing costs for the seventh time in a year on Thursday. President Christine Lagarde, however, indicated little about future rate directions, stressing the need for meeting-by-meeting decisions.

Some Governing Council members remain undecided, preferring to assess soft economic indicators and variables like energy prices before making predictions about the next meeting. Others lean towards a new rate reduction on June 5, barring significant easing of trade tensions with the U.S.

An ECB spokesman declined to comment. One source mentioned that only President Trump’s acceptance of the EU’s “zero-for-zero” proposal, which aims to eliminate all bilateral tariffs, could prompt them to pause on rate cuts in June.

Another source, originally supportive of a pause before the trade war, now views a June cut as more likely due to ongoing turmoil. However, they cautioned that rate cuts do not guarantee lower endpoint rates and might simply be front-loading to support the economy.