Looking ahead, and even with the current 90-day pause for ‘reciprocal’ tariffs, we think that the ECB’s work is not yet done. On the contrary, lower energy prices and the stronger euro exchange rate have actually increased disinflationary pressures in the eurozone, probably leading to a downward revision of the ECB’s own inflation forecasts. As headline inflation is now likely to drop below 2% much earlier than the ECB had envisaged previously, there is more room for the ECB to continue cutting rates.
