ECB’s March 5-6 meeting accounts revealed a heated debate among Governing Council members over both the 25bps rate cut decision and the tone of accompanying communications.

With considerable uncertainty clouding the outlook—ranging from global trade policy to persistent services inflation—many policymakers urged caution, particularly in avoiding language that could be construed as forward guidance. The balance of risks, especially from tariff escalations and uneven disinflation, made it clear that any commitment to further cuts would be premature.

A few members were only willing to support the March rate cut on the condition that the policy statement “avoided any indication of future cuts or of the future direction of trave”.

This led to a debate on whether to remove the phrase “monetary policy remains restrictive”. In the end, Chief Economist Philip Lane’s proposed compromise—“monetary policy is becoming meaningfully less restrictive”—was broadly accepted.

This phrasing was viewed as neutral enough to reflect the evolving inflation outlook without implying a preset path.

Crucially, the ECB emphasized that the revised language should not signal the outcome of April’s meeting. “Both a cut and a pause” are “on the table, depending on the incoming data.

Full ECB accounts here.

Bundesbank President Joachim Nagel issued a strong warning today, saying the US administration’s new tariff measures “endanger global economic stability.”

Nagel emphasized the need for strong alliances and fewer trade barriers to tackle today’s global challenges, adding that the US is pursuing a “completely different direction” with economic policies that could leave many losers—especially within its own borders.

Echoing these concerns, Greek ECB Governing Council member Yannis Stournaras said the US tariffs are expected to weigh on Eurozone GDP growth rate by 0.3% to 0.4% in the first year, though he noted that the broader inflation outlook remains unaffected.

Stournaras added that the US tariffs were “not an obstacle” to an ECB rate cut in April.

ECB Executive Board member Isabel Schnabel warned today that a global trade war could cause a sharp resurgence in inflation and weigh heavily on growth.

In a speech, she highlighted that a severe disruption in global trade flows could lift inflation by several percentage points in the early years.

She added that even a “mild decoupling” scenario would still have a meaningful impact—adding up to 1% to inflation and taking years to unwind.

ECB President Christine Lagarde warned that the global effects of US-led tariffs will be “negative,” though the extent of the damage depends heavily on the scope, duration, and targeted products.

In an interview with Ireland’s Newstalk radio, she emphasized that the broader implications for global trade and growth would vary, but the potential for lasting disruption is real.

Lagarde also noted that history shows such trade escalations often end in talks rather than prolonged battles.

“Quite often those escalation of tariffs, because they prove harmful, even for those who inflict it, lead to negotiation tables,” she said, suggesting that any initial damage might eventually give way to diplomatic resolutions and the removal of trade barriers.