The European Central Bank holds interest rates because the tariffs keep political decision -makers on the side

The European Central Bank recorded interest rates in the middle of the great economic uncertainty on Thursday negotiate a trade agreement with the USA before the end of the month.

The ECB reduced the interest rates at each of its four sessions this year and took over its most important deposit facility from 3% in January to 2% in June. Last year it reduced the rates of a record high of 4%.

“The environment remains extremely uncertain, especially because of trade disputes” Inflation and growth prospects in June remained supported by the latest data.

While the annual inflation in the euro area reached the central bank 2% destination last monthDealers expected a stop in July – for the most part due to the geopolitical volatility. The United States are the EUS greatest Bilateral commercial and investment partner and the 27-member block exported 503 billion euros (590 billion US dollars) in the states last year.

From Thursday the future of this trade relationship remained in the air One possibility is a 15% basic tariff course of 15% For all EU imports to the USA together with the EU’s retaliation measures.

ECB officials have been proposing for some time that their work is almost done in reducing inflation, since it is chasing according to the so-called neutral level with which the rates neither stimulates nor restrict growth. ECB chef economist Philip Lane said CNBC At the beginning of this month that “the last cycle is done and the inflation lowers”, but that political decision -makers would remain vigilant to changes in the medium -term prospects.

In a press conference after the decision, the ECB President Christine Lagarde said that the economy of the euro zones was carried out Better than expected in the first quarter. This was partly due to the front charge of exports before the expected tariffs, but also due to stronger private consumption and investments, increasing real income and simpler financing conditions, she said.

Lagarde emphasized the current uncertainty in the forecast and said that the growth of growth was “inclined down”, whereby the escalation of the trade voltages may be exported, investments and consumption and the feelings and mood of the household.

Conversely, a quick solution for trading voltages together with higher European defense and infrastructure expenditure could increase growth more than before, she said.

The investors were very judged whether the central bank is concerned about the youngest Appreciation in the euroWhich can have a deflationary effect when imports become cheaper.

Lagarde found on Thursday that a stronger euro could “dismantle inflation” and that higher global tariffs could increase the price at the same time if countries with overcapacity could surround their exports into the euro area. The euro was chopped off after the ECB decision and acted at 5:32 p.m. in London at 1.176 US dollars. This is still of a price of around 1.026 US dollars at the beginning of the year, as the investors have moved away from the Greenback Because of political and tax uncertainty.

However, Lagarde again emphasized that the ECB monitors a flip-side scenario in which fragmented supply chains restrict the domestic economy and increase prices worldwide. Higher budget spending and extreme weather events also risk an increase in inflation, she said and described the current situation as “waiting and watch”, but overall a policy as in a “good place”.