The ECB is preparing for a new rate cut

Analysts believe that the ECB will cut interest rates again this week, given the increased economic pressure due to trade conflicts and the strengthening of the euro. 

Economists emphasize that since the March meeting, when a pause seemed likely, the regulator's position has changed. At that time, rates were considered close to a neutral level, and optimism increased due to a change in German fiscal policy and an increase in defense spending in Europe, which supported the growth prospects of the eurozone.

However, new US tariffs on European goods, the strengthening of the euro and lower energy prices have increased concerns about slowing growth and disinflation. In these circumstances, the ECB is likely to continue easing monetary policy to strengthen market confidence. Experts call the expected reduction in rates a «safety» step with minimal risk.

A delay in action could raise concerns about the ECB's ability to support the economy and further strengthen the euro, which has already reached record levels. In addition, the regulator is likely to reconsider the rhetoric, emphasizing that the deposit rate of 2.25% is within a neutral range. If trade conflicts persist, the ECB may ease more significantly.