Friedemann Vogel / EPA
European Central Bank President Christine Lagarde.
As it was predicted: cut into 0.25 points, from 3% to 2.75%. Economy has stagnated and should remain weak. TAriffs that Trump wants to apply will have a “negative global impact”, warns the president of the European Central Bank.
The European Central Bank (ECB) this Thursday interest rates at 25 base points at the first meeting of the year, continuing the rate reduction cycle started last year.
Thus, the rate applied to the permanent ease of deposits decreases to 2.75%, the interest rate of the main refinancing operations drops to 2.9%and the rate applicable to the permanent ease of liquidity assignment drops to 3.15%. All “with effect from February 5, 2025”.
Economy has stagnated and should remain weak
In what is the fourth consecutive descent From the interest rate since they reached a maximum of 4% in September 2023, the president of the PCS pointed out that the decision was unanimous among the governors and that there was no discussion about the point where the reduction trajectory stops.
Christine Lagarde stressed that “by lowering interest today, it has already been reduced by a total of 125 points for the high level” where the rates were, also noting that monetary policy is still “in restrictive territory” and there was no “there was no“ Discussion, because it would be premature, about the point where it is necessary to stop. ”
Lagarde assured that the governors know “the following direction”, while the rhythm, sequence and magnitude will be depending on the data that the ECB collects in the coming weeks and months.
“For our meeting in March, we will receive the projection of the ECB team and will have two additional inflation data,” he said.
The president of the ECB also highlighted, in the justification of this decision, that The eurozone economy stagnated in the 4th quarter and must remain weak in the short termnamely with the industry to contract while the services expand.
In addition, families have not yet been encouraged by salaries to increase consumption, but “the conditions for recovery continue to exist.”
“We are confident that inflation will reach our goal of 2% Throughout this year, ”says Lagarde, but the data still does not give reasons to“ celebrate ”.
Trump’s negative impact
The rates that US President Donald Trump wants to apply will have a “negative global impact”, but it is not possible to evaluate the effects without details, said Lagarde, who pointed out that “at this time, there is nothing possible Capture in terms of numbers, scope, a list of items to realize what is considered ”.
“When this happens, it will enter our assessment,” said the president of the ECB, and may have several effects namely due to the rates, the redefinition of trading routes and possible retaliation.
Even so, what is already possible to realize is that the application of customs rates “will have a negative global impact,” he reiterated.
Donald Trump’s presidential campaign was based on promises of economic protectionism, including economies such as Canadian, Mexican or Chinese. Beyond these countries, Trump has already threatened to apply rates to transactions with EU, Bolivia or Denmark – due to the territory of Groinent.
The US President told business leaders this month gathered at the World Economic Forum in Davos (Switzerland) to manufacture their products in the United States, otherwise they will have to pay tariffs. ”
