ECB Raises Alarm Over US Tariffs Impact on Eurozone Economy

The European Central Bank (ECB) has issued a stark warning regarding the escalating global trade tensions, particularly those ignited by expansive US tariffs, which are now casting a shadow over the economic prospects of the eurozone.

Economic Bulletin Highlights Risks to Recovery

In its latest Economic Bulletin, ECB officials highlighted the potential for rate cuts, amidst rising uncertainties, to disrupt the region's delicate recovery phase. "The current disruptions in international trade, alongside financial market tensions and geopolitical uncertainties, are significantly dampening business investments," the bulletin stated. It further cautioned that a more cautious consumer outlook could lead to reduced spending, exacerbating the situation.

Resilience Amidst Challenges

Despite signs of easing inflation and resilient domestic demand, the ECB pointed out that increasing trade frictions could further depress both investment and consumption. With the eurozone's economy recording a modest growth of only 0.2% in the last quarter of 2024, its vulnerability to external shocks remains a critical concern, especially as policymakers strive to anchor inflation around the 2% target.