Handful of ECB policymakers wanted larger cut, worried about tariffs – sources
2024.12.12 12:29
FRANKFURT (Reuters) – A handful of European Central Bank policymakers initially wanted a larger interest-rate cut on Thursday, worried among other things that new U.S. tariffs would hamper economic growth, three sources told Reuters.
The ECB cut interest rates by a quarter of a percentage point on Thursday and kept the door open to more easing as the euro area economy is dragged down by political instability at home and the threat of a fresh U.S. trade war.
But around five of the 26 members of the Governing Council initially pushed for a 50-basis-point cut in light of lower inflation and growth forecasts.
They argued, in particular, that economic output could grow by less than the ECB’s already downgraded 1.1% projection next year if Donald Trump’s incoming U.S. administration imposed fresh tariffs on the European Union.
The small minority of policymakers clamouring for the bigger cut soon yielded, the sources said, adding there was little appetite for rushing decisions given the prevailing uncertainty.
An ECB spokesman declined to comment.
ECB President Christine Lagarde said Thursday’s cut was backed by all policymakers and that the staff’s new economic projections do not reflect any U.S. tariff that has not already been introduced.
