Economists anticipate a rapid reduction in interest rates by the ECB due to the economic crisis.

Economists have begun to adjust their forecasts regarding the monetary policy of the European Central Bank (ECB), anticipating a faster reduction in interest rates than previously expected. According to a recent survey conducted by the economic agency Bloomberg, a significant majority of the analysts who participated in the study believe that the European monetary authority will take bolder steps to revive an economy facing weak growth and a notable decrease in inflation. The survey indicates that a reduction of 0.25 percentage points is expected at the next ECB meeting, with that pace of decline maintained until June 2025. If these forecasts hold true, the interest rate could be around 2%, a figure that was previously expected to be reached within a year. This shift in expectations responds to an economic context that has begun to show signs of weakness, leading economists to reconsider the urgency with which the ECB must act. Amid these projections, risks to the European economy have multiplied. Political turmoil in key countries like France and Germany, as well as growing geopolitical tensions stemming from the conflicts in Ukraine and the Middle East, create an uncertain scenario. Additionally, the recent rhetoric from U.S. President-elect Donald Trump regarding the imposition of trade tariffs adds another layer of complexity to an already complicated landscape. Carsten Brzeski from ING, one of the economists who participated in the survey, warned that the ECB's restrictive stance has become a risk factor in itself. According to Brzeski, the structural problems in the region and the possibility of a trade war driven by the United States are concerns that must be taken into account when evaluating the central bank's future decisions. Brzeski's warning underscores the interconnectedness of global markets and how political decisions in one part of the world can ripple through and impact the economic stability of Europe. As uncertainty intensifies, bond yields in France have begun to reflect this instability. In particular, the spread between France's 10-year bonds and Germany's has reached levels not seen since the European debt crisis in 2012. This increase in yields suggests that investors are demanding greater compensation for the risk associated with holding debt from a country facing internal political tensions. The possibility that the ECB may act more aggressively in the near future also highlights a shift in market perception regarding the direction of monetary policy. While rate cuts may provide temporary relief to the economy, the speed at which these measures are implemented could largely depend on the evolution of political and economic events in the region. Analysts are closely watching how these variables will influence the ECB's decision-making. The current context invites consideration not only of the monetary response but also of the coordination of fiscal policies that could complement the ECB's decisions. The need to revitalize the economy is not only a challenge for the central bank but also a call to action for European governments, which must work together to address the underlying causes of stagnation. In summary, the ECB finds itself at a crossroads. Internal and external pressures suggest that interest rate cuts may be necessary more quickly than expected. However, the risks associated with political and economic instability in Europe and beyond should not be underestimated. The coming months will be critical in determining whether the ECB can balance the need for economic revitalization with the management of emerging risks on the European horizon.