ECB Vice President Luis de Guindos told the European Parliament today that while the Eurozone economy likely managed modest growth in Q1, risks to the outlook have intensified.
He pointed to exceptional uncertainty stemming from new trade barriers, financial market tensions, and geopolitical instability, all of which could weigh on business investment and consumer spending in the months ahead.
“In this environment, consumers may become cautious about the future and hold back spending,” de Guindos added.
Separately, Finnish ECB Governing Council member Olli Rehn also flagged the growing headwinds, suggesting the central bank may need to cut interest rates below neutral levels and maintain maximum flexibility.
Rehn emphasized that underlying inflation pressures are easing and that the escalation of US trade tariffs is largely contributing to increased downside risks for Eurozone inflation.
