European Central Bank Poised for Rate Cut Amid Subdued Inflation and Sluggish Growth
The European Central Bank is expected to cut its key deposit rate by 25 basis points to 2% on Thursday, responding to euro zone inflation dipping to 1.9% in May—just below its 2% target. First-quarter GDP growth of 0.3% underscores the region's economic fragility.
Geopolitical crosscurrents complicate the policy landscape. Potential U.S. tariff escalations under a TRUMP administration and EU countermeasures loom, while Germany's fiscal shifts and bloc-wide rearmament plans introduce further uncertainty. Markets now price in a possible July follow-up cut as weak demand persists.