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ECB Concerns Over US Trade Policies Impact
2024-12-17 05:40:09
Economy
Europe
Markets

ECB Concerns Over US Trade Policies Impact

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The European Central Bank (ECB) has expressed concerns over the potential impact of US trade policies and geopolitical tensions on the European Union's economic stability. President Christine Lagarde highlighted the risks these factors pose to growth and inflation, suggesting further interest rate cuts if inflation nears the 2% target.

Inflation has decreased from a peak of 10.6% in 2022 to 2.3%, but political uncertainties in France and Germany continue to cloud the economic outlook. Eurozone growth remains weak, with forecasts of 0.8% in 2023 and 1.3% in 2024. Despite some recovery in services, challenges persist due to political instability, wage increases, and potential profit hikes.

The ECB remains vigilant, balancing both upside and downside risks.

Related news on that topic:

US Trade Policy Shift Threatens Eurozone Economy

The European Central Bank (ECB), led by Christine Lagarde, has raised concerns over the potential impact of a shift towards protectionist trade policies by the United States on the Eurozone's already fragile economy. The ECB's caution centers around the possibility of renewed consumer pessimism, driven by proposed tariffs on US imports, which could dampen economic growth in Europe. Inflation in the Eurozone has recently decreased from its peak of 10.6% in 2022 to 2.3%, and the ECB has responded with four interest rate cuts in 2024. Despite this, the Eurozone's growth outlook remains weak, with factors like low investment and high energy costs continuing to exert pressure. Lagarde emphasized the risk of geopolitical uncertainties, such as US trade policies, further affecting household confidence and economic performance. The ECB's growth forecast for the Eurozone has been revised downward, with a prediction of only 0.7% growth this year. Meanwhile, political instability in France and Germany adds to the region's economic challenges. The potential for protectionist measures by the US could significantly impact European exporters, particularly those specializing in investment goods, thereby threatening the Eurozone's economic stability. Lagarde highlights the unpredictability of how such trade policies might affect inflation, considering possible retaliatory actions and currency fluctuations. As the Eurozone navigates these challenges, the ECB remains poised to adjust monetary policy, with interest rates expected to decrease further if inflation continues to ease towards the 2% target. The situation underscores the delicate balance the ECB must maintain to foster economic resilience amid external pressures.

Federal Reserve's Interest Rate Adjustments and Economic ... Implications

The Federal Reserve is poised to implement a 0.25 percentage point cut to its benchmark interest rate, transitioning to a more measured policy approach. Despite a notable decrease in inflation from 7.2% to 2.3%, it still surpasses the desired target. This recalibration follows previous significant cuts and anticipates just a few more adjustments in 2025. While mortgage rates have slightly declined, they remain comparatively high, leaving many potential homebuyers apprehensive. Economic policies proposed by President-elect Donald Trump raise concerns about future inflation, yet their immediate impact on Fed decisions remains uncertain. Additionally, the European Central Bank has also reduced its rate, reflecting a broader trend among central banks. As consumers await these changes, the potential for increased affordability in housing markets looms, particularly if rates continue to drop. However, persistent inflationary pressures suggest that challenges may lie ahead for both the economy and everyday consumers.

Read 14 more recent news on this topic

The press radar on this topic:

EuroNews
16. Dezember 2024 um 15:32

European Central Bank warns of how a shift in US trade policies could affect the EU

Economy
Politics
ECB warns US trade, geopolitical risks; to cut rates further if inflation eases towards 2% target; neutral rates eyed; wage, profit increases pose upside risks; French, German political uncertainty adds to EU woes; eurozone growth seen weak; Trump tariffs, French, German politics cloud outlook; inflation peaked at 10.6% in 2022; ECB cut rates 4 times in 2024; Lagarde sees both upside and downside risks.
EuroNews
16. Dezember 2024 um 21:25

ECB President Warns Against US Trade Policy

Economy
Politics
ECB President Lagarde warns of the impact of US trade policy and geopolitical tensions on growth and inflation in the Eurozone. She suggests that further interest rate cuts are possible if inflation continues to decline.
The Street
19. Dezember 2024 um 00:53

Another Fed interest rate cut is on the horizon — here’s what to expect TheStreet Daily Newsletter

Economy
Finance
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Inflation reached 9.1% in 2022, prompting Fed rate hikes. Another 0.25% rate cut is likely, potentially aiding borrowers. CME FedWatch predicts 99% chance of cut. Credit card interest rates and mortgage rates will likely decline 0.25%, saving consumers billions. Inflation eased in 2024, but grocery, housing affordability, and gas prices were key issues in the 2024 presidential election. Deflation is difficult to achieve, and rising prices are likely here to stay. Fed chair Jerome Powell says new..
EuroNews
16. Dezember 2024 um 18:53

Recovery of Eurozone services in December, but political problems remain

Economy
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The eurozone saw a recovery in services despite a recession in manufacturing. Inflation rose due to higher wages and prices, pushing the ECB to cut interest rates. Germany and France faced problems due to political uncertainty, with France also experiencing a credit rating downgrade. New orders declined and businesses proceeded with job cuts, putting the resilience of the labor market at risk. The recovery in services offers a silver lining, but reforms are needed to overcome the obstacles and..
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