ECB’s Cipollone: There is still room for adjusting rates downward

• Inflation is almost reaching the target
• Economic fundamentals not significantly different from December projections
• Rate cuts are coherent with declining inflation picture
• No recession seen, soft landing is still the main scenario
• US tariffs on China could force Beijing to dump goods on Europe
• That could weigh on growth, inflation

So far, the ECB outlook hasn’t changed by much since the turn of the year. The next rate cut is still expected in March but what comes after remains a toss up for the time being. Trump has already threatened Canada and Mexico with tariffs for starters and it’s only a matter of time before Europe is next up in line. And that’s the key risk that the ECB is watching out for currently.

This article was written by Justin Low at www.forexlive.com.