ECB switches to crisis mode

Short Note Major Markets , 17. Apr.
As was widely expected, the Governing Council of the ECB decided today to lower the deposit rate (and the other two key interest rates) by a further 25 basis points to 2.25%. Due to the US tariff conflict, the ECB is focusing its attention on the increased downside risks to the economic outlook. The ECB is therefore switching to “crisis mode” in order to be able to react quickly to changing conditions.

For the time being, we are sticking to our assessment that there will be a further interest rate cut of 25 basis points at the next meeting in June, although the downside risks to the interest rate outlook have increased noticeably following today's meeting. In the event of a further escalation of the trade conflict or a rapid cooling of economic data, the probability of a larger interest rate cut in June or further interest rate cuts after June has therefore increased.