A Small Group of Members Calls for a 50 Basis Point Rate Cut at the ECB Governing Council

Forex - Some policymakers from the European Central Bank reportedly expressed concern that new U.S. tariffs could hinder economic growth and called for a rate cut greater than 25 basis points yesterday. According to information from three sources to Reuters, about five of the 26 members of the Governing Council initially pushed for a 50 basis point rate cut in light of lower inflation and growth forecasts. They argued that if the new U.S. administration, under Donald Trump, applies new tariffs on the European Union, the economic output next year could grow less than the ECB's already lowered projection of 1.1%. Sources indicated that policymakers seeking a larger cut quickly backed down and that there was very little appetite to make hasty decisions given the current uncertainty. ECB President Christine Lagarde stated that Thursday's rate cut was supported by all policymakers and that the staff's new economic projections do not reflect any U.S. tariffs that have not yet been implemented.