ECB member Stournaras said that cutting interest rates would be the right response to Trump's tariffs.
- Tariffs on trade are likely to provoke a reaction.
- A 25 basis point cut in interest rates in December is the right response.
- We must lower interest rates at every meeting until interest rates reach 2%.
- The average neutral interest rate is about 2%.
- It's too early to say whether the ECB needs to go down from the neutral level.
He is certainly more lenient than Villeroy, who commented earlier and said that the increases in tariffs on products from around the world announced by US President-elect Donald Trump will not change inflation expectations in Europe.
Indeed, traders have been pricing in a full 25 basis point interest rate cut for a while now, but the question is whether we will see the ECB move by 50 basis points or not.
