ECB consensus builds for June rate cut but no appetite for big move, sources say

Francesco Canepa

Sat, Apr 26, 2025, 9:17 AM 2 min read

By Francesco Canepa

WASHINGTON (Reuters) -European Central Bank policymakers are becoming progressively assured astir cutting involvement rates successful June arsenic ostentation continues its march lower, but determination is small to nary appetite for a large move, six sources told Reuters.

ECB governors gathering successful Washington for the International Monetary Fund and World Bank's Spring Meetings took banal of a weakening system successful the euro portion and astir the satellite arsenic uncertainty from tariffs imposed by U.S. President Donald Trump puts a dampener connected investment.

Data retired of the euro portion besides showed concern maturation stalling this period and wage hikes expected to easiness considerably.

Most importantly for inflation, the 20% tariff complaint provisionally imposed by Trump connected European goods had been little terrible than modelled by the ECB and the hazard of retaliation by the European Union had truthful acold been averted.

That meant that galore governors were present seeing increasing chances of an eighth quarter-point chopped astatine their June 4 meeting, erstwhile the ECB volition update its ain economical forecasts. The ECB trimmed its benchmark complaint to 2.25% earlier this month.

In enactment with the ECB's authoritative line, they were keeping an unfastened mind, however, fixed that the determination was inactive much than a period distant and economical argumentation had go unpredictable since Donald Trump's April 2 announcement.

An ECB spokesperson declined to comment.

Trump's determination shook capitalist assurance successful the U.S. system and adjacent its presumption arsenic the world's harmless haven, causing substance prices arsenic good arsenic the dollar to autumn against the euro.

This resulted successful increasing disinflationary unit successful the euro zone, assuaging concerns astir precocious terms maturation becoming entrenched among adjacent immoderate of the much hawkish members of the ECB's Governing Council.

The outlook further retired remains foggy, however, with the imaginable of a much fragmented world, cheaper imports from China and stronger home request from Germany's fiscal spending plans creating contrasting forces.

For this reason, too, policymakers who spoke to Reuters saw nary crushed astatine contiguous to see a bigger, 50-basis-point cut, which they besides believed mightiness rise unnecessary alarm among marketplace participants.

(Reporting by Francesco Canepa; Editing by Aidan Lewis)