ECB’s Simkus Signals Potential for Further Rate Cuts Amid Trade Tensions

European Central Bank Governing Council member Gediminas Simkus indicated the possibility of at least two additional interest rate cuts this year, citing global trade weakness exacerbated by new US tariffs as a significant threat to Europe’s economic growth.

Speaking at the IMF Spring Meetings in Washington, Simkus noted a continued decline in inflation, with expectations for further slowing in coming months. The ECB has already reduced the deposit rate seven times since June 2023, most recently to 2.25%.

"There’s room to ease policy without triggering financial instability," Simkus stated, emphasizing the need for accommodative measures in the current economic environment. While not committing to a specific timeline, he didn’t rule out two more rate reductions in 2024 if economic data warrants such action.