by Francesco Canepa

Washington (Reuters) – Officials of the European Central Bank (ECB) are increasingly confident as to a new drop in guiding rates in the euro zone in June with inflation which continues to reflect, but they do not provide for a large -scale reduction in loan costs, reuters have been told.

The Governors of the ECB gathered in Washington for the spring meetings of the International Monetary Fund (IMF) and the World Bank (BM) have taken stock of the deterioration of the economy in the euro zone and in the world against the backdrop of uncertainty linked to customs duties desired by the American president, Donald Trump.

The PMI data in the euro zone also show a weakening of business activity this month, while wage growth should slow up considerably.

In addition, so -called reciprocal American customs duties, initially 20% on products from the European Union (EU), were lowered to 10%, while the risk of reprisals on the part of the EU is for the moment. All this should not help greatly feed inflation in the euro zone.

Many ECB governors therefore consider more and more likely an eighth reduction in the institution’s rates, of 25 base points at the meeting of June 4. The ECB will also update its economic forecasts during this meeting. The institution brought back its 2.25%deposit rate on April 17, which had climbed in September 2023, to 4%.

But in accordance with its official line, the various BCE options remain open, no decision having yet been made at this stage when economic policy has become unpredictable since Donald Trump’s announcements on so -called reciprocal customs duties.

A spokesperson for the ECB refused to comment.

Donald Trump’s announcements shaken investors’ confidence in the American economy and called into question the status of refuge value of the United States, which led to a fall in oil and dollar prices.

This resulted in a appeasement of fears on inflation, including in the most “Hawkish” (restrictive) members of the ECB.

The longer -term forecasts remain vague, with the prospect of a more fragmented world, cheaper imports from China and a more vigorous euro zone demand thanks to Germany investment and military expenditure projects, which create contradictory forces.

This is also the reason why the officials of the ECB, who spoke with Reuters, do not see a favorable eye a reduction of 50 base points of the guiding rates, believing that this could unnecessarily alarm investors.

(Francesco Canepa report; Claude Chendjou)

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