ECB Cuts Interest Rates to Support Eurozone Economy

LONDON (Reuters) – The European Central Bank (ECB) cut interest rates for the seventh time in a year on Thursday, looking to prop up an already struggling euro zone economy that will take a large hit from U.S. tariffs.

Highlights from ECB President Christine Lagarde’s Comments

On Tariffs

> “I’m not going to characterize what’s happening at the moment. […] The consequences will differ depending on which part of the world you stand.”

On Trust

> “Confidence, predictability, and a reasonable level of certainty are important factors for economic players to make decisions.”

No Talk of Stimulus

> “We did not discuss the matter of stimulation. […] we will take the appropriate monetary policy stance.”

No Better Time to be Data-Dependent

> “There is no better time to be data-dependent […] we will know more on that front and the fiscal front.”

Relationship with the Fed

> “I have a lot of respect for my esteemed colleague and friend (Fed Chair) Jay Powell. […] we will continue doing so in an undeterred manner.”

On the Debate Within the Governing Council

> “In total candour with you, […] at the end of the day this is not what I’m arguing for.”

Trade Re-Routing

> “There will be some redirection, rerouting, of goods that will be supplied by markets that are subject to much higher tariffs.”

‘Neutral Rate’ Only in a Shock-Free World

> “Anyone who thinks that we are in a shock-free world, […] would I suggest maybe raise their hands.”

Need to be Data-Dependent

> “Now we need to be data-dependent, […] and we will decide meeting by meeting.”

ECB Stance Determination

> “Our stance will have to be determined by two key attributes: readiness and agility.”

Direction of Travel

> “I will not comment on the direction of travel, I will comment on the destination.”

Restrictiveness

> “Meaningless to assess restrictiveness because it relies heavily on comparisons.”

Tariff Effect

> “We know that it’s a negative demand shock. […] the net impact on inflation will only become clearer over time.”

Unanimous Decision

> “The decision to cut rates by 25 basis points was a unanimous decision.”

Trade Disruptions

> “Increasing global trade disruptions are adding more uncertainty.”

Global Trade Tensions

> “Downside risks to economic growth have increased.”

Defence Boost

> “The increase in defence and infrastructure spending would add to growth.”

Urgent Fiscal Policies

> “It is even more urgent for fiscal and structural policies to make the euro area economy more productive.”

Exceptional Uncertainty

> “The economic outlook is clouded by exceptional uncertainty.”