ECB’s Simkus: Eurozone inflation depends on EU retaliation to the US

• Eurozone inflation depends on EU retaliation to the US.
• Geopolitics since the starts of the year is bad news for the economy.
• There is downward pressure on inflation.
• Need to watch for China goods rerouting to Europe.
• ECB June projections may be a little bit worse.
• June ECB cut is needed.
• There is no central scenario for ECB rates.
• It’s unclear if a post-June cut will be in July or September.
• We are more or less there on inflation.

Now that the US has made it clear that the 10% tariff rate is the floor, the ball is in EU’s court. Will they take a more hawkish stance?

This article was written by Giuseppe Dellamotta at www.forexlive.com.