ECB switches off the autopilot

In the run-up to the ECB Governing Council meeting, there was widespread speculation as to whether or not the ECB would describe its monetary policy as "restrictive" again. The Council members probably discussed this intensively. The result was the formulation that "monetary policy is becoming meaningfully less restrictive". The ECB is thus signaling that, after six interest rate cuts, it sees less room for further interest rate cuts. This is also supported by President Christine Lagarde who did not repeat the previous statement that the "direction of travel" is clear (i.e. downwards). Instead, she emphasized the high level of uncertainty – in particular with regards to trade policy, which the ECB blamed today for the slightly reduced growth forecasts for 2025 and 2026. Depending on how the facts develop, the next decision could be a rate cut or a pause. All in all, the ECB has switched off the autopilot today.

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