European Central Bank policymakers are increasingly leaning toward a rate cut in June due to weakening economic conditions, but they remain cautious about making a significant move. Six sources close to the ECB told Reuters that while inflation continues to decline, there is little appetite for a major adjustment. During the International Monetary Fund and World Bank’s Spring Meetings in Washington, ECB governors discussed the economic slowdown in the euro zone and globally, influenced by tariffs imposed by U.S. President Donald Trump. Data indicates that business growth has stalled this month, and wage increases are expected to ease. Although the 20% tariff rate provisionally imposed by Trump on European goods has been less severe than anticipated, the risk of retaliation remains. This scenario has led many governors to consider an eighth quarter-point cut at their June 4 meeting, when updated economic forecasts will be released. The ECB spokesperson declined to comment. The uncertain economic outlook and potential for a fragmented world economy have made policymakers hesitant to consider a larger, 50-basis-point cut, which could alarm market participants. — new from Reuters
