ECB Policymakers Express Concerns Over Monetary Policy's Restrictiveness

The latest meeting accounts from the European Central Bank (ECB) have unveiled a growing uncertainty among policymakers regarding the sufficiency of current monetary policy restrictions. This concern is further exacerbated by external pressures, notably the potential inflationary impacts of escalating United States tariffs and the threat of retaliatory measures.

Inflation Risks and Fiscal Spending Challenges

"The interplay between US tariffs and possible retaliation could introduce upward risks to inflation, particularly in the short term," the report highlighted. Additionally, the ECB warned that a substantial increase in defense-related fiscal expenditures across Europe might disrupt the current disinflation trend.

ECB's Stance on Interest Rates

While advocating for caution in adjusting interest rates, the ECB clarified that such prudence does not equate to a gradual approach, leaving room for more aggressive actions if necessary.