ECB to Cut Rates Below 2% in June Amid Trade War Risks:

The European Central Bank (ECB) is set to lower its deposit facility rate from 2.25% to 1.75% at its June 5 meeting, marking its eighth consecutive cut in a year. The decision, driven by weak inflation, sluggish growth, and global trade tensions, was signaled by top officials responding to economic risks from President Trump’s tariffs. Pierre Wunsch, Belgium’s central bank governor and ECB Governing Council member, told the Financial Times that rates “slightly below 2%” could support growth, a shift from his cautious stance in February. He linked the move to Trump’s 10-20% tariffs on EU exports, which threaten inflation and growth, alongside a stronger euro and falling energy prices. Eurozone inflation was 2.2% in April, but economists expect further declines. Martins Kazaks, Latvia’s central bank governor, said on CNBC that the ECB is nearing the end of its rate-cutting cycle, with “a couple” more cuts possible this year if inflation remains stable. He noted the euro area’s 0.3% growth in Q1 and warned of recession risks in some countries due to trade policies and weak growth. Markets expect further cuts by year-end, driven by economic headwinds and Trump’s trade agenda.