Tariff Madhouse - Uncertainty looms over hard-fought win

The April cut was a prudent move. The ongoing disinflationary trend across the euro area clearly justified our decision to continue easing monetary policy.

We have made significant progress. Inflation is approaching its target, and I am confident that we will reach it within the next few months.

The recent series of interest rate cuts has placed us in a neutral range. Our policy stance is no longer restrictive and does not hinder economic activity.

However, we remain cautious. We must, particularly under today’s volatile and often chaotic conditions. We must remain vigilant and agile. Undeterred and calm in our pursuit to get inflation on target.

Risks are here to stay.

We are operating in a fast-shifting environment. Uncertainty dominates the economic landscape.

Heightened global trade tensions, particularly those stemming from U.S. tariff policies, have introduced significant ambiguity into the system, eroding confidence.

We need time to see how all this unfolds, to analyse incoming data and information, and to learn about the risks associated with it.

This ambiguity affects the outlook for both inflation and economic growth.

We should gain more clarity on these developments in the coming weeks, but achieving complete certainty by June remains unattainable.

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What does this all mean for our June meeting?

Our approach will remain data-dependent. We have no precommitted path. Upcoming economic indicators and further insights into ongoing trade tensions will be critical.

June’s decision will depend heavily on new data, updated forecasts and risk assessment. This reinforces our commitment to flexibility and agility.

Overall, these uncertain times require a balance of caution and pragmatic optimism.

By closely monitoring incoming data and adjusting our policies accordingly, we aim to safeguard price stability. And that will support economic growth, and ensure our actions align with evolving economic realities.