The European Central Bank (ECB) is expected to cut interest rates during its meeting on December 12, as inflation in the eurozone nears containment, according to Martins Kazaks, a member of the ECB’s Governing Council. Speaking to Latvia’s TV3 on Monday, Kazaks emphasized the importance of easing borrowing costs to support economic recovery.
“We see that the inflation problem will soon end, and that means we can lower rates,” Kazaks said, adding that such a move would mark the fourth cut in the ECB’s easing cycle since June.
While the anticipated rate cut aligns with market expectations, the path beyond remains uncertain, with geopolitical risks, including potential U.S. trade tariffs under the incoming Trump administration, casting a shadow over Europe’s economic trajectory. Kazaks expressed cautious optimism, noting, “Europe’s economy is going from its lowest point upwards.”
Chief ECB Economist Philip Lane highlighted the complexities of potential U.S. trade policies in a Financial Times podcast, explaining that tariffs could impact euro-area inflation in multiple ways. “It’d be very important not to say there’s necessarily a net bias in either direction,” Lane said. He outlined both inflationary and disinflationary pressures, underscoring the unpredictable nature of future developments.
The ECB’s decision to ease rates comes as the eurozone economy shows signs of recovery from its recent trough, though risks tied to global trade dynamics and geopolitical developments remain significant.
