ECB: Muller Stresses Need For Caution Around Future Rate Cuts

Highlights from Muller's usual post-ECB meeting blog post: "We as central bankers need to be vigilant, as several factors, such as tariffs or the impact of defense spending, could accelerate price increases in the near future. To me, this means that we need to be increasingly cautious about further interest rate cuts".

• "It is too early to quantify the impact of potential US trade restrictions and EU retaliation on euro area growth and price increases"...."What is clear is that additional trade restrictions would reduce growth and prosperity in both the US and Europe and, at least in the short term, lead to faster price increases."
• For ECB policy, it "depends on whether the faster price increases associated with tariffs are only temporary".
• " The economic impact of additional defense investments will depend on how much of the necessary equipment is imported and how much of the money is spent within the euro area."
• "Central bank interest rates in the euro area have already fallen to a level where it can be argued that they are no longer holding back corporate investment or the credit market".
• "Price increases are still on a downward trend"..."The generally mediocre state of the economy is expected to keep price increases in check".