On April 25, 2025, the European Central Bank (ECB) is preparing to reduce interest rates in June, expected to be the eighth cut by 25 basis points, amid an economy in the region affected by US tariffs and weak growth. Could this move revive the Eurozone economy? Let’s analyze in detail.

ECB Prepares to Cut Interest Rates: Impact from US Tariffs

After tense meetings at the International Monetary Fund (IMF) this week, policymakers #ECB appear pessimistic about the economic outlook. They predict that President Donald Trump's tariff policies – even if relaxed in the coming weeks – will still cause long-term damage, reducing spending and investment, thereby pulling inflation down. The appreciating euro, tighter financial conditions due to increased fiscal spending, and declining energy prices also contribute to price pressures, reinforcing the case for an interest rate cut in June.

ECB Has Cut Rates Seven Times: Heading Towards 1.5%?

Since June 2024, the ECB has cut interest rates seven times, reducing the deposit rate from 4% to 2.25%. Economists from Bank of America, Deutsche Bank, and Morgan Stanley forecast that rates could drop to 1.5% this year to stimulate demand. Some Governing Council members, such as Olli Rehn (Finland) and Gediminas Simkus (Lithuania), support bringing rates to this level, but others like Klaas Knot (Netherlands) and Martins Kazaks (Latvia) warn against acting too hastily, arguing that the long-term impact of recent events is still unclear.

ECB President Christine Lagarde emphasized: 'When the scale and distribution of shocks remain highly uncertain, we cannot commit to a specific interest rate path.' She affirmed that the ECB will rely entirely on economic data to make decisions.

Weak Growth and Decreasing Inflation: Real Data

Recent reports indicate that economic growth in the Eurozone is slowing down. Purchasing manager surveys show declining confidence and weak demand, while the IMF has lowered its growth forecast for the 20-country region to 0.8% this year (down from 1% previously). Inflation is also decreasing, with the IMF and ECB predicting that the price index will reach the 2% target in the second half of 2025. Estimates from #Bloomberg suggest that April inflation may drop to 2.1%, and GDP growth in Q1 reached only 0.2%, according to Eurostat.

Alfred Kammer from the IMF commented that the 2% inflation target could be achieved with one more 25 basis point interest rate cut, and it is unnecessary to go below this level unless there is a 'major shock.' However, some ECB policymakers are more optimistic. Francois Villeroy de Galhau (France) believes that 'there is currently no inflation risk in Europe,' while Peter Kazimir (Slovakia) predicts that inflation will reach the target in the coming months, earlier than initially expected (early 2026).

Long-term Impact and Cautious Perspective

The interest rate of 2% is seen as 'neutral,' neither stimulating nor restraining demand. Klaas Knot believes the ECB should maintain this level, as the long-term impact from trade disruptions and defense spending on infrastructure in Europe remains unclear. However, the ECB meeting on June 5 may be forced to lower its consumer price growth forecast for 2026 from 1.9% (expected in March), with the 2027 figures determining price stability in the long run.

Impact on the Crypto Market

The ECB's interest rate cut could indirectly support the crypto market. Lower rates will weaken the euro, driving capital into risk assets like Bitcoin ($93,300) and Ethereum ($1,615, soon to increase gas limits fourfold). This aligns with global trends as the USD also weakens (USDX bottomed at 97.9 on April 21, 2025, according to #FXCE ), creating conditions for crypto appreciation.

Conclusion: Can the ECB Save the European Economy?

The ECB is preparing to cut interest rates in June, marking the eighth cut aimed at stimulating economic growth in the Eurozone amid pressure from US tariffs and decreasing inflation (expected at 2.1% in April). Although some policymakers are optimistic, uncertainty from global trade remains a significant challenge. This move could support the crypto market, but investors need to closely monitor economic data to assess the long-term impact.

Risk Warning: Crypto investment carries high risks due to price volatility and legal uncertainties. Please consider carefully before participating.