ECB's Rate Cut Uncertainty Linked to Tariff Developments

Madis Muller, a member of the European Central Bank's Governing Council, emphasized the uncertainty surrounding the ECB's capacity for further rate cuts during a recent economic forecast event hosted by the Bank of Estonia. According to Muller, the decision to reduce rates further is heavily contingent on the evolution of trade tariffs.

Current Rates Not Hindering Growth

Muller reassured attendees that the present interest rates are not acting as a barrier to economic expansion or investment. This statement comes amidst growing concerns over the impact of tariffs on the eurozone's economic recovery.

Tariffs Could Accelerate Inflation

Highlighting potential risks, Muller pointed out that tariffs, especially a speculated 25% levy on EU exports by the US, might lead to a short-term spike in inflation. Despite these challenges, he remains optimistic about Estonia's economic resilience, ruling out the likelihood of a recession in the near term.