MNI BRIEF: Services Inflation Fall Key To Cut - BOS Escriva

The recent drop in headline inflation and particularly in services inflation to 3.5% in March was a key factor that made the European Central Bank to cut interest rates by 25bp on Thursday, Bank of Spain Governor Jose Luis Escriva said in a video released by the BoS.

Risks coming from trade tensions are materializing and the euro area economy will be hit but it is difficult to estimate the precise impact that will depend on the outcome of negotiations, Escriva said. 

The impact on inflation is more uncertain, he said, as trade tensions could increase prices but euro appreciation along with the drop in oil prices and weakening demand could also push prices down.