The European Central Bank cut its main interest rate by a quarter of a percentage point April 17, citing growing trade tensions after President Donald Trump’s tariffs sparked a global trade war.
While the 20 countries that use the euro have built up “resilience against global shocks,” the “outlook for (economic) growth has deteriorated owing to rising trade tensions,” the ECB said in a statement.
The central bank is one of a number of global economic and financial players to warn that tariffs could weigh on economies and hurt everyone from major corporations to regular people. Similar warnings have been issued by the International Monetary Fund, the World Trade Organization, U.S. Federal Reserve Chair Jerome Powell and others.
The ECB’s rate cut to 2.25%, which was widely expected, is the seventh in the past year.
In contrast to the ECB, the U.S. Federal Reserve held rates steady at its most recent policy meeting in March, and officials, including Chair Jerome Powell, have hinted that trade uncertainty will keep rates on hold awhile longer.