From Morningstar: 2025-04-17 12:29:00

The European Central Bank cut its key interest rate by 0.25 percentage points to 2.25%, marking the sixth consecutive rate cut. ECB President Christine Lagarde emphasized rising trade tensions as a threat to economic growth. Stock markets and the euro remained stable after the announcement. The ECB is the only major central bank to cut rates in April.

Lagarde stated that the outlook for growth has deteriorated due to rising trade tensions. The ECB is approaching neutral interest rates and dropped the phrase “monetary policy is becoming meaningfully less restrictive” from its statement. Analysts expect another rate cut in June to address lower crude oil prices and economic weakness.

Tariffs are expected to impact eurozone growth negatively, with UBS already downgrading growth projections for 2025 and 2026. Cheaper goods from China may lead to disinflation, while supply bottlenecks could push prices higher. Consumer prices in the eurozone rose by 2.2% year over year in March.

Interest rate cuts typically lead to rising equity markets and higher bond prices. Lower rates benefit borrowers with cheaper consumer debt and mortgages but may reduce cash savings rates for savers. The next ECB meetings in 2025 are scheduled for June, July, September, October, and December.



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