The ECB Should Wheel Out Its Monetary Bazooka
A 50 basis-point cut ought to be on the table this week.
Shipping containers stand stacked in the Frankfurt container port with the ECB headquarters in the distance.
Photographer: Florian Wiegand/Getty Images EuropeSince the European Central Bank’s last meeting, Donald Trump has taken a sledgehammer to global commerce, stoking recession risks and volatility in financial markets everywhere. And yet ECB policymakers gathering in Frankfurt on Thursday remain on course, undisturbed by the tempest. The results look like a pretty sure thing: a quarter-point cut in the deposit rate to 2.25% combined with some hand-wringing about mounting uncertainties. That’s not going to move the economic dial.
The temptation as always is to wait for the next quarterly economic review in June to garner as much information before making any bold decisions. But what more evidence is needed, during mounting trade tensions, that economic conditions have deteriorated?