The European Central Bank cut its main interest rate by a quarter point on Thursday, citing rising trade tensions following U.S. President Donald Trump’s sweeping tariff campaign. The decision brings the rate down to 2.25 percent, marking the ECB’s seventh cut in the past year.
In a statement, the bank said eurozone economies had built some resilience against global shocks, but the outlook for growth had worsened. Trade friction, it said, was now a defining risk.
ECB President Christine Lagarde told reporters the effects were already visible. Business investment was slowing, she said, and consumers were growing cautious. “Disruptions to international commerce, financial market tensions and geopolitical uncertainty are weighing on business investment,” Lagarde said. “As consumers become more cautious about the future, they may pull back on spending.”
Trump’s tariff policy, announced on April 2, has sparked a broader trade war with retaliatory threats from Europe and Asia. Economists warn the fallout may ripple through global supply chains.
Yael Selfin, chief economist at KPMG, said trade disruptions could lead to a glut of manufactured goods and potential deflation. “The outfall of the trade disruptions could create a global glut of manufactured goods,” she said. “That could push prices into deflationary territory this year.”
While the ECB has moved to protect the eurozone economy, the U.S. Federal Reserve has taken a different approach. At its most recent policy meeting in March, the Fed held interest rates steady. Chair Jerome Powell signalled that uncertainty from Trump’s tariffs may keep rates unchanged for the foreseeable future.
Speaking in Chicago on Wednesday, Powell offered his strongest remarks yet. “These are very fundamental policy changes,” he said, warning that the tariffs could drag on growth.
Trump reacted swiftly. On social media, he criticised Powell’s decision to hold rates and called the Fed’s latest report a “complete mess.” He added, “Powell’s termination cannot come fast enough.”
Lagarde responded with calm defiance. “I have a lot of respect for my esteemed colleague and friend Jay Powell,” she said at her press conference. She also underscored the ECB’s independence, warning against political interference in monetary policy.
“For us, here, the independence of central banks is fundamental,” Lagarde said. “Any country that wants to join the eurozone must prove it can uphold that independence in law and in practice.”
As European NATO countries rush to strengthen their armed forces, large pension bills threaten to divert funds from urgently needed military hardware.
Foreign Secretary heads to EU Foreign Ministers meeting to highlight the need for a new, ambitious security relationship. David Lammy will attend attends high-level Gymnich EU talks in Poland.
Latest data show dwindling river flows and worsening drought: these conditions are triggered by warmer-than-average weather and lower precipitation across much of the continent since the beginning of the year, according to the Drought in Europe – April 2025 report, published by the JRC.
Major European and UK companies are warning that the United States' sweeping new tariffs under President Donald Trump are creating deep uncertainty, weakening consumer confidence, and complicating long-term investment plans.
The European Commission has announced the allocation of EUR 52 million in funding support through the EU Renewable Energy Financing Mechanism (RENEWFM) to nine renewable energy projects in Finland and Estonia.
Azerbaijan showcased its green transition plan at the Copenhagen Ministerial, targeting 30% renewable energy by 2030. The country also secured a $300 billion climate finance pledge and helped finalize a key carbon market agreement, highlighting its growing role in global climate action.
European foreign ministers signed the Lviv Statement supporting a special tribunal and a U.S.-backed ceasefire, during a visit to Ukraine that included a memorial tribute to fallen soldiers.
White House economic adviser Kevin Hassett said on Friday that early signs ahead of this weekend’s U.S.-China trade talks in Switzerland appear positive, with both sides showing mutual respect and a constructive tone.
A new U.S.-supported initiative to deliver humanitarian aid into Gaza is expected to start operating shortly, U.S. Ambassador to Israel Mike Huckabee said Friday, though specific details are yet to be made public.
U.S. President Donald Trump signaled support for steep tariffs on Chinese imports, calling 80% levies “right” ahead of high-level trade talks in Geneva aimed at easing escalating tensions between Washington and Beijing.
India has fired a series of missiles into Pakistani-controlled territory, in what it has described as “Operation Sindoor”
For the first time in history, an American has been chosen to lead the Catholic Church, as Cardinal Robert Prevost is named pope.
Discover every major VE Day 80 event in Britain, 5‑8 May 2025—from London’s parade and fly‑past to street parties, concerts and museum exhibitions.
Chinese e-commerce platform Temu has announced it will no longer sell goods directly from China to U.S. customers, shifting instead to U.S.-based sellers amid the closure of a long-criticized customs loophole.
Cardinals from 70 nations have gathered in Vatican City to begin the historic conclave to elect the next pope, following the death of Pope Francis 17 days ago. This conclave is the most geographically diverse in Church history, showcasing Francis’ legacy of inclusivity.
In a notable shift from traditional Republican policy, President Donald Trump has proposed raising taxes on high-income earners to help finance broader tax cuts for middle- and working-class Americans.
Ukraine is exploring whether to replace the U.S. dollar with the euro as its reference currency, as Kyiv aligns more closely with the EU and global trade fractures deepen.
The U.S. Federal Reserve kept its benchmark federal funds rate unchanged on Wednesday, maintaining the target range at 4.25% to 4.50%, in a widely expected move as the central bank navigates a complex economic environment marked by slowing inflation, global trade tensions, and political pressure.
Ford is raising prices on three of its Mexico-made models starting May 2, becoming one of the first major automakers to react to U.S. President Donald Trump's steep auto tariffs, which are reshaping industry costs and consumer prices.
As European NATO countries rush to strengthen their armed forces, large pension bills threaten to divert funds from urgently needed military hardware.
Azerbaijan showcased its green transition plan at the Copenhagen Ministerial, targeting 30% renewable energy by 2030. The country also secured a $300 billion climate finance pledge and helped finalize a key carbon market agreement, highlighting its growing role in global climate action.
European foreign ministers signed the Lviv Statement supporting a special tribunal and a U.S.-backed ceasefire, during a visit to Ukraine that included a memorial tribute to fallen soldiers.
White House economic adviser Kevin Hassett said on Friday that early signs ahead of this weekend’s U.S.-China trade talks in Switzerland appear positive, with both sides showing mutual respect and a constructive tone.
A new U.S.-supported initiative to deliver humanitarian aid into Gaza is expected to start operating shortly, U.S. Ambassador to Israel Mike Huckabee said Friday, though specific details are yet to be made public.
U.S. President Donald Trump signaled support for steep tariffs on Chinese imports, calling 80% levies “right” ahead of high-level trade talks in Geneva aimed at easing escalating tensions between Washington and Beijing.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment